Qualcomm to Buy Atheros for $3.1 Billion

Qualcomm Inc. agreed to buy Wi-Fi chip maker Atheros Communications Inc. for $3.1 billion in cash as it aims to address growing demand for devices that use Wi-Fi to connect to the Internet.The deal—Qualcomm's largest acquisition to date—fills a hole in the company's communication-chip offerings. The importance of Wi-Fi has been growing as more devices—including smartphones, tablets and notebooks—connect to the Internet.

The deal, which values Atheros at $45 a share, comes during a flurry of acquisitions in the technology sector and puts pressure on Qualcomm's rivals, such as Broadcom Corp. Chip companies, including Intel Corp., have been using their high levels of cash to make purchases to add more features to their chips. Qualcomm has about $10 billion in short-term cash and marketable securities. Adding long-term marketable securities raises the figure to $18.4 billion, with $12.1 billion of that located offshore, the company said.

A takeover of Atheros gives Qualcomm greater exposure to Wi-Fi chips and other markets where it doesn't have a significant presence, including providing components for laptop personal computers, which now come standard with Wi-Fi chips.

The deal is expected to close in the first half of 2011 and modestly add to Qualcomm earnings in fiscal 2012. Atheros will be renamed Qualcomm Networking & Connectivity, and Atheros President and CEO Craig Barratt will join the company as president of the group. Mr. Jacobs said Qualcomm also plans to retain the rest of the Atheros senior management team.

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