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FX.co ★ European Commission gives green light to merger of two major chipmakers

European Commission gives green light to merger of two major chipmakers

European Commission gives green light to merger of two major chipmakers

The European Commission has recently approved the $37-billion acquisition of Broadcom by Avago, noting that this takeover would not damage effective competition in this crucial high technology sector.
Singapore-based chipmaker Avago Technologies Limited will pay $17 billion in cash and $20 billion in its own shares for its American rival, Broadcom Corp. After the merger is completed, Broadcom shareholders will own about 32% of the combined corporation.
This acquisition will create the sixth-largest semiconductor manufacturer in the world as the merged entity will have $15 billion in annual revenue.
Avago was established in 1961 as a semiconductor products division of Hewlett-Packard. Later in 2000, the company became independent. Avago specializes in the development of radio-frequency components for wireless networks and corporate servers.
Broadcom is the world’s largest producer of Wi-Fi chipsets for mobile devices. In 2014, Broadcom had a market capitalization of $32.6 billion while the total capitalized value of Avago was estimated at about $34.9 billion dollars. Nevertheless, Broadcom managed to outperform its competitor in terms of revenue as it made $8.4 billion in sales last year, compared with its acquirer’s $4.9 billion revenue.

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