Broadcom to acquire PON chip vendor BroadLight

Broadcom Corp. (NASDAQ: BRCM) says it has signed a definitive agreement to acquire BroadLight, Inc. for $195 million net of cash assumed. Privately owned BroadLight develops processors and related software for passive optical network (PON) applications, specifically GPON.

The deal calls for Broadcom to buy all of the outstanding shares of capital stock and other equity rights of BroadLight. Broadcom will pay cash, less a portion of the price attributable to certain unvested employee stock options that will be paid in Broadcom restricted stock units. The company also may pay an additional amount of up to $10 million in cash to holders of BroadLight capital stock and other rights if the new acquisition meets certain performance goals.

The acquisition of the GPON-centric BroadLight complements Broadcom’s 2010 purchase of Teknovus (see “Broadcom expands portfolio with Teknovus EPON technology”), which made EPON semiconductors. Broadcom now can play on both sides of the street when it comes to PON architectures.

“The need for increased bandwidth for IPTV services, HDTV broadcasting, and high-speed Internet access are driving momentum for deploying fiber networks,” said Dan Marotta, executive vice president and general manager of Broadcom’s Broadband Communications Group. “Combining BroadLight’s PON solutions with the strength of Broadcom’s broadband access portfolio will enable us to offer a complete, end-to-end solution for customers – from OLT at the central office to CPE at the home. BroadLight’s strong engineering team and broad IP will complement and extend our ability to deliver next-generation access technologies to customers.”

Excluding any purchase accounting related adjustments and fair value measurements, Broadcom expects the acquisition to be roughly neutral to earnings per share in 2012. The transaction is expected to close in Broadcom’s second quarter of 2012 and remains subject to customary closing conditions.