In what would be its biggest acquisition so far, Irvine chip maker Broadcom Corp. said Tuesday that it will buy a company that develops the wireless Bluetooth technology for stock worth $457.1 million.
Bluetooth, a hot new arena, uses radio frequencies instead of wires or cables to let electronic devices communicate with each other and over the Internet at short ranges.
Under the deal, Broadcom, which makes high-speed communications chips, will issue 3 million shares for the 87% of Innovent Systems Inc. in El Segundo it doesn't already own. Broadcom stock gained $5.69 to close at $152.38 on Nasdaq.
The acquisition would be Broadcom's 10th and most expensive to date. Three weeks ago the company announced a deal to purchase Pasadena semiconductor company Pivotal Technologies Corp. for about $242.5 million, marking Broadcom's entrance on the Bluetooth stage.
The two deals were intended to complement each other, said Broadcom Chief Executive Henry T. Nicholas III. Pivotal Technologies offered Broadcom some key technology, while Innovent Systems has a more developed product focus, he said.
"This is very synergistic," Nicholas said. "We now have the largest engineering work force dedicated to Bluetooth technologies on the planet." Fifty of Innovent's 60 employees are engineers, he said.
The deal will give Broadcom a strong boost in its overall home networking sector, said Kimberly Funasaki, senior analyst at IDC research firm in Mountain View, Calif.
Although Broadcom has focused on cable set-top boxes, cable modems and high-speed networking, the company has shown an increasing interest in personal area networks and wireless technology, Funasaki said.
"This is a great acquisition for Broadcom," said Brian Canny, an analyst for the market research firm Parks Associates in Dallas. "Broadcom is the leader in phone line networking technology. Now they're looking at being a really strong player in radio frequency, too."
Innovent, founded in January 1999 by the brother-sister team of Reza and Maryam Rofougaran, received about $500,000 in seed money from Broadcom with the understanding that Broadcom would consider acquiring it, Nicholas said.