UPDATE 1-Atheros to buy Intellon for $244 mln, ups Q3 outlook

* To buy Intellon for $244 mln in cash and stock

* To pay about $115 mln to $141 mln in cash

* Sees deal to add to adj EPS in first half of 2010

* Raises Q3 rev, adj EPS outlook

* Atheros shares off 4 pct, Intellon shares soar 44 pct

Sept 8 (Reuters) - Wireless networking chipmaker Atheros Communications Inc ATHR.O said it agreed to acquire semiconductor company Intellon Corp ITLN.O for about $244 million in cash and stock, and raised its third-quarter outlook.

The agreement provides an overall value of $7.30 per Intellon share, the company said. This represents a 46 premium to Intellon’s Friday close.

Intellon shares jumped 44 percent to touch a new 52-week high of $7.20.

Atheros expects to issue about 4.2 million to 5.1 million common shares and equivalents and pay about $115 million to $141 million in cash. Intellon shareholders may choose to receive either cash, or Atheros shares, or a combination of cash and stock.

The deal, which would help the chipmaker combine its wireless LAN and Ethernet products with Intellon’s powerline communications technology, is expected to add to Atheros’ adjusted per-share earnings in the first half of 2010.

Intellon said about 22 percent of its shareholders have signed an agreement to vote in favor of the deal.

In a separate statement, Atheros also raised its third-quarter adjusted profit outlook to 35 cents to 39 cents per share, from its prior view of 29 cents to 31 cents a share.

It now expects revenue of $145 million to $150 million for the quarter, up from its prior forecast of $129 million to $134.6 million.

Analysts on average were expecting earnings of 30 cents a share, before items, on revenue of $132.7 million, according to Reuters Estimates.

Atheros’ shares were down 94 cents, or 3 percent, at $27.04, while Intellon shares rose 42 percent, or $2.10, to $7.10 in morning trade Tuesday on Nasdaq.

For the related alerts, double-click. [ID:nWNAB7193] [ID:nWNAB7198]. (Reporting by Deepti Govind in Bangalore; Editing by Ratul Ray Chaudhuri)