Semiconductors deal: Qualcomm buys Atheros

Semiconductors manufacturer Atheros makes chips that would give Qualcomm a foothold in the tablet computer market.

This undated file image provided by Atheros Communications shows Atheros's XSPAN logo. Qualcomm Inc., the developer of semiconductors and other technology for cellphones, says it has agreed to buy chip maker Atheros for $3.2 billion in cash.

Atheros Communications, Inc./AP/File

January 6, 2011

Qualcomm Inc., the developer of chips and other technology for cell phones, said Wednesday it has agreed to buy chip maker Atheros Communications Inc. for $3.2 billion in cash.

Atheros makes semiconductors designed to connect computers wirelessly to the Internet, which will plug a critical gap in Qualcomm's portfolio of technology and give it a foothold in the emerging market for tablet computers, analysts say.

If the deal goes through, it "would quickly turn what is currently a glaring weakness in (Qualcomm's) cellular portfolio into a strength," Jefferies & Co. analyst Adam Benjamin said.

San Diego-based Qualcomm said it has agreed to pay $45 per share for Atheros, which is based in Santa Clara, California. That's 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 71 cents to $44.71 in pre-market trading Wednesday, while Qualcomm shares rose 44 cents to $51.41.

The boards of both companies have approved the deal, which also requires approval by Atheros shareholders and regulatory clearance.

Qualcomm expects to close the acquisition in the first half of this year.