Avago buys Broadcom for £24bn

Avago is buying Broadcom, but the merged companies will not be called Avago but Broadcom.

The unusual deal, which will cost San Jose, California-based Avago some $37 billion (£24.02bn), has gotten unconditional antitrust approval from the European Union's Commission, Reuters reported on Tuesday.

"European Commission spokesman Ricardo Cardoso declined to comment. The EU competition authority is scheduled to rule on the deal by Nov. 9. U.S. regulators nodded through the takeover in August,” it says in the report.

Avago and Broadcom did not immediately reply to emails for comment.

There have been a couple of large deals in the semiconductor industry this year, with consolidation driven by demand for cheaper chips and new products to power Internet-connected gadgets as well as the need to cut costs.

"Today's announcement marks the combination of the unparalleled engineering prowess of Broadcom with Avago's heritage of technology from HP, AT&T, and LSI Logic, in a landmark transaction for the semiconductor industry," said Hock Tan, President and Chief Executive Officer of Avago. "The combination of Avago and Broadcom creates a global diversified leader in wired and wireless communication semiconductors. Avago has established a strong track record of successfully integrating companies onto its platform. Together with Broadcom, we intend to bring the combined company to a level of profitability consistent with Avago's long-term target model."

Under the terms of the definitive agreement, Avago will acquire Broadcom for $17 billion in cash consideration and the economic equivalent of approximately 140 million Avago ordinary shares, valued at $20 billion as of May 27, 2015, resulting in Broadcom shareholders owning approximately 32% of the combined company. Based on Avago's closing share price as of May 27, 2015, the implied value of the total transaction consideration for Broadcom is $37 billion.