Exclusive: EU regulators to approve $5.5 billion Broadcom, Brocade deal

FILE PHOTO: Broadcom Limited company logo is pictured on an office building in Rancho Bernardo, California May 12, 2016. REUTERS/Mike Blake

BRUSSELS (Reuters) - Chipmaker Broadcom AVGO.O is set to win EU antitrust approval for its $5.5 billion bid for Brocade BRCD.O after agreeing to modest concessions in the latest deal in the chip sector, three people familiar with the matter said on Tuesday.

Singapore-based Broadcom, formerly Avago Technologies, is known for its connectivity chips used in products ranging from mobile devices to servers, while California-based Brocade makes networking switches, software and storage products.

The sector has seen a wave of consolidation in recent years as chipmakers scale up in response to the growing market in connected devices and cars.

Broadcom, which wants to grab a larger share of the data center products market via the deal, offered concessions last month in a bid to address the European Commission’s concerns.

Brocade declined to comment. Broadcom shares gained after the Reuters story and were trading 1.6 percent higher at $228.7 in early trade while Brocade was up 0.39 percent at $12.64.

The people said Broadcom had made concessions on interoperability so clients can use whatever brand of switches on their network, independent of the supplier.

Broadcom also pledged to set up Chinese walls between technical teams developing components and others developing and marketing competing devices to ensure confidentiality, they said.

The Commission, which sought feedback from third parties, is expected to clear the deal by its scheduled May 12 deadline, according to the sources.

The EU competition enforcer declined to comment.

Additional reporting by Liana Baker in San Francisco; editing by David Clarke