GlobeSpan and Virata Fall After Merger Announcement

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GlobeSpan (GSPN) was down 8.1% in midmorning after it said it will buy Virata (VRTA) in a $582 million stock deal. Virata was down 17.3%.

GlobeSpan, a maker of chips for high-speed Internet access, would exchange 1.02 of its shares for each share of Virata. The deal values Virata, which supplies chips and software to broadband equipment makers, at an 8% premium over Friday's closing price.

The companies said the deal would create the top supplier of chips, software and systems for the digital subscriber line market, with pro forma revenue of $528 million for the year ending June 30.