Broadcom acquires UK DSL firm

Broadcom will acquire British firm Element 14 in a stock swap worth $594m.

Broadcom will issue 2.65 million shares for all outstanding shares of Element 14, which makes high-port density, low-power digital subscriber line chipsets, software and communications processor technology.

Broadcom closed down 9.44 at 224.50 Tuesday, valuing the deal at $594 million. Element 14's technology allows for lower power consumption for DSL services. Broadcom said that with the new technology, it will be able to offer DSL vendors a significant increase in the number of DSL-enabled copper twisted-pairs that can be supported within their heat, power and space constraints.

Chief executive Dr Henry T Nicholas III said that the deal "position[s] Broadcom as a leader in the ADSL market".

After the deal is completed, Broadcom will establish a new DSL business unit, run by Element 14 chief executive Stan Boland, which will encompass Broadcom's VDSL and ADSL businesses, and all related telco local loop transmission activities.

Broadcom expects to record a one-time charge for research and development expenses, and insurance expenses for UK employees, in its fourth quarter ending 31 December.

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