NEW YORK (AP) — Chipmaker Broadcom is buying Brocade in a deal valued at approximately $5.5 billion.
Brocade shareholders will receive $12.75 per share, a 13 percent premium to the Tuesday closing prices of the computer networking company.
The deal also includes $400 million in debt.
Broadcom Ltd. plans to sell Brocade's IP Networking business, which includes wireless and campus networking, data center switching and routing and software networking solutions. Brocade CEO Lloyd Carney said the company will work with Broadcom to try to find a buyer for the IP Networking business.
The deal, targeted to close in the second half of Broadcom's fiscal 2017, is not conditioned on the sale of the IP Networking business. It still needs approval from shareholders of Brocade Communications Systems Inc.