Please ensure Javascript is enabled for purposes of website accessibility

Synaptics Buying Rights to a Set of Broadcom IoT Technologies

By Eric Volkman – Jul 8, 2020 at 7:16PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The assets will change hands in a roughly $250 million all-cash deal.

Broadcom (AVGO -1.36%) is about to pocket hundreds of millions of dollars by divesting a set of internet of things (IoT) assets. The buyer, human interface hardware and software maker Synaptics (SYNA -1.56%), has signed an agreement to buy "certain assets and manufacturing rights" connected to Broadcom's IoT products.

The price is roughly $250 million, Synaptics said in its press release trumpeting the deal. This will be paid entirely in cash.

Woman using a smartphone to adjust a themostat.

Image source: Getty Images.

More specifically, Broadcom is relinquishing the rights to numerous WiFi, Bluetooth, and GPS technologies that help power and control IoT functions. All told, the company expects the acquisition will add around $65 million in annual revenue to its results.

The new assets will be used by the purchaser to bolster its wide range of IoT products. Synaptics said that "[t]his acquisition complements Synaptics' ability to sell into a broad range of devices such as IP cameras, smart displays, speakers, home automation, and gaming consoles – all of which require cutting-edge technologies including Wi-Fi 6 and 6E, Bluetooth 5.2 and GPS L5."

Broadcom shouldn't have to wait too long to receive its money. Synaptics said that the transaction should close in its current first quarter of fiscal 2021, which ends on Sept. 30. 

Broadcom has not yet revealed how it will utilize the proceeds of the sale. As of the end of April, the tech sector mainstay had over $9.2 billion in cash on its balance sheet, against nearly $45.6 billion in long-term debt.

Investors in both companies seem to be pleased by the deal. Broadcom's stock rose by almost 2.1% on Wednesday, while Synpatics shot more than 13% higher.

 

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends Broadcom Ltd. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Synaptics Incorporated Stock Quote
Synaptics Incorporated
SYNA
$99.01 (-1.56%) $-1.57
Broadcom Limited Stock Quote
Broadcom Limited
AVGO
$444.01 (-1.36%) $-6.12

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
326%
 
S&P 500 Returns
102%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/02/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.