Broadcom: Sale Of Certain Ethernet Controller-related Assets To QLogic

(RTTNews) - Chipmaker Broadcom Corp. (BRCM) and QLogic Corp. (QLGC), a supplier of high performance network infrastructure solutions, on Tuesday announced an agreement under which QLogic will acquire certain 10/40/100Gb Ethernet controller-related assets and non-exclusive licenses to some intellectual property relating mainly to Broadcom's programmable NetXtreme II Ethernet controller family. The total deal is valued about $147 million in cash.

In connection with the deal, Broadcom and QLogic will enter into a long-term supply agreement whereby Broadcom will become ASIC supplier to QLogic in support of the NetXtreme II product line.

"This transaction enables customers to be served without disruption by a leading partner, allows Broadcom to provide a broader solution portfolio overall and creates value for our shareholders," said Rajiv Ramaswami, Executive Vice President and General Manager of Broadcom's Infrastructure and Networking Group.

Broadcom is focusing internal Ethernet controller efforts on strengthening its end-to-end data center platform while establishing a long-term ASIC supply relationship with QLogic in support of NetXtreme II Ethernet controllers.

Concurrent with the closing, it is expected QLogic will license certain Broadcom patents under a non-exclusive patent license agreement that will cover QLogic's Fibre Channel products in exchange for a license fee of $62 million.

The deal, which has been approved by the boards of both companies, is expected to close in the first quarter of calendar 2014.

Excluding potential one-time gains related to this asset sale, Broadcom expects the deal to be slightly accretive to earnings per share in 2014. QLogic expects the deal to be immediately accretive to revenue and adjusted earnings per share.