Avago Technologies and Broadcom have entered into a definitive agreement under which Avago will acquire Broadcom in a cash and stock transaction that values the combined company at US$77 billion in enterprise value, according to the companies.

Under the terms of the agreement, Avago will acquire Broadcom for US$17 billion in cash consideration and the economic equivalent of approximately 140 million Avago ordinary shares, valued at US$20 billion as of May 27, 2015, resulting in Broadcom shareholders owning approximately 32% of the combined company. Based on Avago's closing share price as of May 27, 2015, the implied value of the total transaction consideration for Broadcom is US$37 billion.

Closing of the transaction is expected by the end of the first calendar quarter of 2016, and is subject to regulatory approvals in various jurisdictions, as well as the approval of Avago's and Broadcom's shareholders.

Following completion of the transaction, Avago president and CEO Hock Tan will continue to serve as president and CEO of the combined company, which will adopt the name Broadcom Limited. Henry Samueli, co-founder, CTO and chairman of the board of Broadcom, will join the board of Broadcom Limited. Samueli will also be appointed CTO of the combined entity. Henry Nicholas, co-founder and past CEO of Broadcom, will serve in a strategic advisory role within Broadcom Limited, reporting to Tan.

"Today's announcement marks the combination of the unparalleled engineering prowess of Broadcom with Avago's heritage of technology from HP, AT&T, and LSI Logic, in a landmark transaction for the semiconductor industry," said Tan in a statement. "The combination of Avago and Broadcom creates a global diversified leader in wired and wireless communication semiconductors."

"When Henry Nicholas and I founded Broadcom, we had a vision of creating the world leader in communications semiconductors. Today's announcement is a continuation of that vision and we could not think of a better partner for the future than Avago," stated Samueli in the same statement.

Broadcom Limited would have annual revenues of approximately US$15 billion, according to the joint statement from Avago and Broadcom.