SAN DIEGO (AP) — Qualcomm Inc. is making a $3.2 billion bet on the continuing spread of Wi-Fi-connected gadgets—think tablet computers, smart phones or even TVs—into every corner of life in the 21st century.
The company has been a pioneer in the cell phone industry, providing chips and other components that help connect handsets to wireless networks. Its agreement to buy Santa Clara-based Atheros Communications Inc.—the company’s largest acquisition yet, once it closes—would give Qualcomm the Wi-Fi capability it’s been looking for.
“From a vision standpoint, we believe that communications capability will go into more and more devices in the world around us,” Qualcomm CEO Paul Jacobs told analysts on a conference call Wednesday.
Jefferies & Co. analyst Adam Benjamin said the takeover of Atheros “would quickly turn what is currently a glaring weakness in (Qualcomm’s) cellular portfolio into a strength.”
Qualcomm’s stock rose 55 cents, or about 1 percent, to $51.52, even as the broader market remained mixed in morning trading Wednesday.
Qualcomm, which is based in San Diego, said it has agreed to pay $45 per share for Atheros—a premium of 22 percent over Atheros’ closing share price Monday, the last trading day before The New York Times reported the potential deal.
Atheros shares rose 53 cents, or 1.2 percent, to $44.53 in morning trading.
The boards of both companies have approved the deal. It still requires approval by Atheros shareholders and regulatory clearance. Qualcomm expects to close the acquisition in the first half of this year.
Atheros has enjoyed steady growth in sales. It booked $542 million in revenue in fiscal 2009, up from $472 million the year before. For the year that just ended, analysts expect $922 million.
The company lists most of the world’s biggest consumer technology companies as customers, including Apple Inc., Dell Inc., Hewlett-Packard Co., Microsoft Corp., Nintendo Co. Samsung Electronics, Sony Corp. and Toshiba Corp.
Qualcomm’s takeover would continue a string of big acquisitions in the sector as companies jockey to benefit from the latest trends in how consumers and big organizations use technology.
Chip-maker Intel Corp. made a similar acquisition back in September, agreeing to buy the wireless chip business of Germany’s Infineon Technologies AG for $1.4 billion.
(© 2011 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)