UPDATE 1-Chip co Sigma Designs to buy CopperGate for $160 mln

* Agreed deal for $92 mln cash plus around 4 mln shares

* Also earmarks up to $5 mln in milestone payments

TEL AVIV, Oct 13 (Reuters) - Sigma Designs Inc (SIGM.O) said on Tuesday it agreed to buy Israeli home networking chip firm CopperGate Communications for $160 million in cash and shares.

CopperGate develops chipsets for multimedia home networking using existing wiring while Sigma makes chips for the IPTV set-top box market and Blu-ray players.

"The transaction ... expands (Sigma's) footprint with key customers, in addition to enabling cross-selling opportunities," the companies said in a statement.

Sigma will pay an estimated $92 million in cash and issue about 4.0 million shares to CopperGate shareholders. Sigma shares closed at $14.33 on Nasdaq on Monday.

Sigma also agreed to pay up to $5.0 million in cash to specified CopperGate employees provided certain milestones are achieved.

The transaction is expected to close in 45 to 60 days.

Israel's Tamir Fishman Venture Capital II Ltd (TFVC.TA) owns 31 percent of CopperGate, Carmel Ventures owns 27 percent and Motorola Inc MOT.N 9 percent.

Tamir Fishman shares, suspended all day pending the announcement, will resume trade at 1329 GMT, the Tel Aviv stock exchange said.

(Reporting by Tova Cohen; editing by John Stonestreet)