SAN JOSE, Calif. -- As expected, Broadcom Corp. has entered into a definitive agreement to acquire Advanced Micro Devices Inc.'s digital TV (DTV) chip business for approximately $192.8 million in cash.
One analyst saw the deal coming several weeks ago. As part of the deal, approximately 530 members of AMD's DTV team and support staff, located in six design centers around the world, will be invited to join Broadcom.
The acquisition of AMD's DTV business is expected to expand Broadcom's DTV business. Many of the products from the unit came from AMD's ATI graphics unit.
AMD's DTV product line includes all Xilleon integrated DTV processors and complete turnkey reference designs, as well as NXT receiver ICs, the Theater 300 DTV processor, and a line of panel processors that perform advanced motion compensation, frame rate conversion and scaling.
"The acquisition of AMD's DTV business, which will become the core of Broadcom's DTV line of business, will enable us to significantly scale and accelerate the completion of our digital TV product portfolio while also expanding our tier one customer base and positions us to achieve leadership and long-term growth in this important market segment," said Daniel Marotta, senior vice president and general manager of Broadcom's Broadband Communications Group, in a statement.
"AMD is executing a strategic plan to transform the company, becoming leaner and more focused while seeking to create a business model to deliver sustainable profitability," said Dirk Meyer, president and CEO of AMD, in a statement. "The sale of our DTV business is a key step in AMD's transformation, helping to strengthen our balance sheet, lower our breakeven point, and hone our focus in order to take full advantage of our position as a leader in both microprocessors and graphics technology.''
Indeed, AMD (Sunnyvale, Calif.) is struggling and has reported several losses and layoffs. In July AMD said it will take an $880 million impairment charge because the digital TV and handheld business unit it acquired with the former ATI Technologies has not been performing as expected.
In connection with the acquisition, Broadcom will pay approximately $192.8 million in cash in exchange for AMD's DTV assets. A portion of the consideration payable to AMD will be placed into escrow pursuant to the terms of the definitive asset purchase agreement.
The closing, which is targeted to occur during Broadcom's fourth quarter ending Dec. 31, 2008, remains subject to customary closing conditions and review by relevant regulatory organizations.
