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Broadcom to Pay $32M For Bluetooth Outfit

Broadcom said it has agreed to acquire Bluetooth chipmaker Zeevo to expand its chipset business.

Under the terms of the deal, Broadcom will be paying privately held Zeevo's shareholders $32 million in a combination of $29.4 million in cash and $2.6 million in restricted stock.

Zeevo makes Bluetooth platforms that combine analog, digital and radio frequency (RF) circuitry that feature acoustical tuning and echo cancellation. The company designs its chips based on the ARM7 processor, using single-chip standard CMOS technology.

The company also devised the concept of "Sound Design for Bluetooth," a quality, reliability and convenience benchmark for Bluetooth audio that includes high-quality audio, interference-free co-existence with IEEE 802.11 wireless, dynamic mode switching and fail-soft, out-of-range behavior.

The purchase is expected to pad Irvine, Calif.-based Broadcom's wireless portfolio with technology it says it wants to use in Bluetooth wireless headsets. Out of all Bluetooth applications, mobile phones dominate the market, followed by wireless headsets and PCs, according to semiconductor market analyst firm In-Stat/MDR.

Broadcom, which already sells Blutonium single-chip transceivers and its WIDCOMM software for mobile phones and PCs, said it will use Zeevo's properties to reach the part of the market that is expected to grow to nearly 90 million units per year by 2008, according to In-Stat/MDR's estimates.

"The acquisition of Zeevo speeds our entry into the huge market for Bluetooth headset devices with a dedicated solution that complements our targeted offering of Bluetooth products," said Robert Rango, group vice president at Broadcom.

Broadcom's purchase may also be helpful to its partners, such as HP , which uses Broadcom's chipsets and has discussed a future that includes smartphones.

The boards of directors of both companies have approved the merger. The deal still needs to clear Zeevo's shareholders and U.S. regulators. The companies said if all goes well, the transaction should wrap up by the end of March. Zeevo has approximately 50 employees at its Santa Clara, Calif., headquarters. An unspecified number of employees will stay on with Broadcom.