Avago’s Aggressive Dealmaking from Its Singapore HQ (what makes them successful?.....Read)

WSJ ^

[Red in Blue PA]

Investors seem to have an insatiable appetite for Avago Technologies Ltd.AVGO +7.76%’s aggressive deal making.

Shares of the Singapore-based chip maker shot up more than 6% in afternoon trading Wednesday after the WSJ reported that Avago in advanced talks to acquire rival Broadcom Corp.BRCM +21.81% Before the WSJ’s report, Broadcom was valued at roughly $28 billion.

Should Avago close the deal, it would be its biggest ever in a long string of acquisitions. The company has grown its market cap and share price over the past six years through aggressive deal making, and at each step of the way, investors have rewarded the company.

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It’s been one of the more aggressive acquirers in the semiconductor sector the past two years Since 2013, it has purchased five companies in the U.S. valued at about $8 billion, including a deal to buy rival LSI Corp. for $6.6 billion. Yet in that span, its market cap is up more than $25 billion during the same time frame. This year, Avago’s stock has jumped more than 40%.

Along the way, it’s drawn comparisons to two other companies that have been closely watched for their aggressive deal making: Actavis ACT +2.24% PLC and Valeant Pharmaceuticals International Inc.VRX.T +1.62%

In the wake of Avago’s deal for Emulex, Sachin Shah, a merger arbitrage strategist at Albert Fried & Co., called Avago the “Valeant of semiconductors.”

All three companies have one key advantage in common that has helped them in the M&A race: A non-US address for their headquarters. Avago is based in Singapore and has a tax rate of roughly 4%; Valeant’s headquarters is in Canada and Actavis’ in Ireland.

[Red in Blue PA]

More proof, if we needed any, that low taxes breed success.

[backwoods-engineer]

Avago is what is left of Hewlett-Packard’s semiconductor operation. While they have many new devices, they still offer many of the transistors (or similar replacement devices) they offered when they were HP. I design in Avago stuff regularly; they are innovators.