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Broadcom to Buy Silicon Spice in $1.2 Billion Stock Deal

Carolyn Koo

In another of its string of acquisitions, Broadcom (BRCM Quote) said Monday that it has agreed to buy privately-held Silicon Spice for $1.2 billion in stock. The move enables Broadcom the maker of semiconductors for voice, data and video networks to process information more efficiently over those networks.

Under the terms of the agreement, Broadcom, based in Irvine, Calif., will issue about 5 million shares of its Class A common stock in exchange for all of Silicon Spice's outstanding stock, options and warrants. Based on Broadcom's closing Friday price of 239 15/16, the deal is valued at $1.2 billion. The merger is expected to close within 60 days.

Broadcom said that it expects to write off research and development expenses related to this acquisition in the third quarter, which ends Sept. 30.

Silicon Spice, based in Mountain View, Calif., makes chips that can process and analyze information more quickly. The chips will be used by Broadcom to build on its home gateway product, which specializes in broadband networks piped into the home, said James Moeller, an analyst with Dain Rauscher Wessels. He rates Broadcom a buy and his firm has done no underwriting for the company.

Just last week, Broadcom said it will buy Altima Communications for about $533 million in stock. It has made nine acquisitions in the past year.

Shares of Broadcom finished up 9, or 4%, at 247 15/16.