Qualcomm Broadens Wi-Fi Horizons With Atheros Buy

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Qualcomm on Wednesday confirmed it will acquire Atheros Communications for $3.1 billion, or about $45 a share. The deal, which is the largest acquisition in Qualcomm's history, allows the company to continue to expand beyond its cellular-centric base and further into the realm of Wi-Fi chips used in client devices like handhelds and laptops.

The $45-a-share price is about 21 percent higher than Atheros shares closed on Tuesday, following a report by The New York Times' DealBook that Qualcomm and Atheros were in talks to merge.

Qualcomm and Atheros have partnered for several years. According to Qualcomm, the acquisition is expected to be completed in the first half of 2011, and be "modestly accretive" to earnings per share in its fiscal 2012, which will be the first year of combined Qualcomm-Atheros operations.

Dr. Craig Barratt, Atheros' president and CEO, will join Qualcomm as president of Qualcomm Networking & Connectivity, the vendor stated.

"It is Qualcomm's strategy to continually integrate additional technologies into mobile devices to make them the primary way that people communicate, compute and access content. This acquisition is a natural extension of that strategy into other types of devices," said Dr. Paul E. Jacobs, chairman and CEO of Qualcomm, in a statement.

The deal is the latest in a flurry of M&A activity among major chip vendors. Intel in the past six months made high-profile acquisitions of McAfee, the cable modem business of Texas Instruments, and Infineon Technologies AG's wireless unit, and Broadcom acquired both 4G chip maker Beceem Communications and femtocell chip specialist Percello.

Qualcomm expects the Atheros acquisition to broaden its distribution channels as well, said Jacobs.

"The combination of Qualcomm and Atheros is intended to accelerate this opportunity by utilizing best-in-class products for communications, computing and consumer electronics to broaden existing customer relationships and expand access to new partners and distribution channels," he said.

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