Two of the biggest technology companies in the computer networking business are to combine their resources after Avago Technologies announced it’s acquiring Broadcom for $37 billion (about £24 billion, AU$49 billion).
At more than twice the value, it dwarfs the Nokia/Alcatel Lucent deal announced last month and the new company, which will take on the Broadcom name, has a combined enterprise value of $77 billion (about £50 billion, AU$102 billion) and annual revenues of $15 billion (about £10 billion, about AU$20 billion).
Obviously cost “synergies” played a massive role in the deal (around $750 million annually, which is about £490 million or AU$985 million) but there’s more to it. The new company will offer an unparalleled product breadth that will cover everything from optical sensors to micro-processors (Raspberry Pi’s and Now TV’s chips are Broadcom).
While Nokia and Alcatel Lucent mentioned 5G and Internet of Things when they merged, the Broadcom/Avago deal will likely see an acceleration in the development of new, promising fixed connectivity technologies for businesses and consumers alike.
In other words, expect your future TiVO set-top box and even your broadband router/ISP modem, both of which will almost certainly have Broadcom chips inside, to get better and faster thanks to Avago’s IP.