RealTime IT News

Broadcom Nabs ServerWorks for $957 Million

Broadcom Corp. Monday continued with its aggressive growth strategy by acquiring ServerWorks in a stock deal valued at $957 million.

Broadcom's products enable the high-speed transmission of voice, video and data over existing communications infrastructures. ServerWorks Corp., an independent supplier of high-performance system input/output (I/O) integrated circuits for servers, develops conduits for delivering high-bandwidth data in and out of servers.

The addition of ServerWorks' product portfolio will enable Broadcom to deploy wire-speed 10 Gigabit per second (Gbps) communications topologies such as InfiniBand, Ethernet and Fiber Channel into server and storage platforms, according to Dr. Henry T. Nicholas III, president and CEO of Broadcom.

" "This acquisition is very strategic to our mission of delivering end-to-end broadband solutions for higher-speed Internet and e-business connectivity," he said. "ServerWorks' will enable Broadcom to enhance the entire Internet and Intranet infrastructure.

"Broadcom's networking technology in combination with ServerWorks' SystemI/O solutions will alleviate the congestion occurring both to and within the servers and storage devices through which all forms of Internet traffic pass," he added. "This has the potential to affect every 'click' of every Internet user -- worldwide -- by speeding up the response time of endpoint server and storage devices."

In connection with the acquisition, Broadcom will issue approximately 11 million shares of its Class A common stock in exchange for all outstanding shares of ServerWorks common stock and upon exercise of outstanding employee stock options, warrants and other rights of ServerWorks.

Up to approximately 9 million additional shares of Broadcom Class A common stock will be reserved for future issuance to the stockholders and option and warrant holders of ServerWorks upon satisfaction of certain performance goals. The merger transaction is expected to close within 60 days

Upon completion of the acquisition, Raju Vegesna, president and CEO of ServerWorks, will become vice president and general manager of Broadcom's ServerWorks Business Unit, which will operate as a wholly owned Broadcom subsidiary based in Santa Clara.

Last Friday the Broadcom completed its acquisition of VisionTech Ltd., an Israeli-based provider of integrated circuits, creating the core of Broadcom Israel. In December, Broadcom purchased SiByte Inc., a developer of high-performance, highly integrated processor chips for networking and communications applications.

The company stock was trading at $87 per share this morning.