Integrated circuit maker Broadcom Corp. continued a buying spree and announced Monday that it will pay approximately US$1.2 billion in stock to acquire optical communications chip maker, NewPort Communications Inc.
NewPort Communications is a privately held company based in Irvine, Calif., that makes chips that allow bandwidth expansion. Broadcom’s primary business is with integrated circuits that allow broadband digital transmission of voice, video and data.
In a statement, Broadcom said the acquisition would provide the company with a broad offering of CMOS (Complementary Metal-Oxide Semiconductor) optical communication technologies for the next generation of Synchronous Optical Network/Synchronous Digital Hierarchy (SONET/SDH) and 10-Gigabit Ethernet Networks.
It also will allow the company to offer optical communication OEM (original equipment manufacturer) and laser module suppliers with a variety of optical and Wide Area Network (WAN) products, such as transceivers, framers, communications processors and high-speed serial interface devices.
NewPort Communications has strategic investors, such as Cisco Systems Inc., Lucent Technologies Inc. and Sumitomo Corp., and they make up the company’s largest customers. Dr. Armond Hairapetian and Lorenzo Longo founded NewPort Communications in 1996.
NewPort Communications in November 1998 raised $5 million in its initial equity offering, with Mayfield Fund and Lucent Venture Partners as major first round investors. During its second round of funding in December 1999, the company raised $23 million.
Broadcom will issue about 5.5 million shares of its Class A Common Stock in exchange for the outstanding shares of NewPort’s preferred and common stock, Broadcom said in a statement. Both companies boards have approved the merger, but it still needs to meet regulatory approval and that of NewPort’s shareholders.
Broadcom shares were up by $8.38 to $233.43 a share in late-morning trading Monday.
On Aug. 7, Broadcom announced the acquisition of chipmaker Silicon Spice Inc. for $1.2 billion in stock. Silicon Spice develops semiconductor technology, software and development tools for high-density voice, fax and data packet transport over WANs. Broadcom’s acquisition of NewPort Communications, if approved, would be the company’s eighth of the year.