Broadcom to buy Serverworks for US$957-million

High-speed communications chipmaker Broadcom Corp. announced Monday a definitive agreement to acquire ServerWorks Corp., which makes input-output chipsets for server, in a stock transaction of about US$957 million.

Broadcom will issue about 11 million shares of stock for all outstanding ServerWorks common stock, options and warrants. Broadcom said the purchase would show as a diluted earnings reduction of about two to three cents per share per quarter throughout 2001 on a pro forma reporting basis. Up to about nine million more shares of Broadcom stock will be issued to the ServerWorks stockholders and option and warrant holders after satisfaction of certain performance goals. Both companies’ boards of directors have approved the merger, but stockholders’ approval and satisfaction of regulatory requirements have not yet been granted.

The deal is valued at $957 million based on the Broadcom stock close of $87 on the Nasdaq exchange on Friday. Early trading Monday pegged the stock at $92.38, up 6.17 per cent. ServerWorks is a privately held company, according to a spokeswoman from the company’s public relations firm.

ServerWorks’ silicon chipsets deliver high-bandwidth data in and out of servers, and coordinate all input-output transactions within the server platform including between external input-output, the main system memory and the central processing units. ServerWorks equipment is used in servers, NAS (network attached storage) and SAN (storage area network) storage systems, networking switches and routers, multifunction and security server appliances, and workstations.

Broadcom is buying ServerWorks to help its effort to deploy 10G bit-per-second technology into its server and storage products, according to a company release.

Broadcom, in Irvine, Calif., can be reached at ServerWorks, in Santa Clara, Calif., can be reached at