The all-cash transaction is valued at $US748 million, the companies said in a joint news release. Intel will pay $US25 per Xircom share, a 38 per cent premium over Xircom's $US18.06 close on Friday, and assume all existing employee options.
Xircom is a supplier of PC modem and network cards to connect mobile computers to corporate networks and the Internet.
The acquisition complements Intel's existing network access businesses because it now will be able to provide products for notebook and mobile computing, Intel said. Xircom will become a subsidiary of Intel, and the organisation will be part of Intel's Network Communications Group.
"Xircom's strengths in small-form-factor design combined with our silicon expertise will allow us to provide customers with new and innovative solutions for linking mobile computing devices to corporate wired and wireless networks," Mark Christensen, Intel vice president and general manager of Intel's Network Communications Group, said in the release.
Intel expects the acquisition to be completed in the first quarter of this year. The board of directors of Xircom has approved the definitive agreement and has unanimously recommended that Xircom stockholders tender their shares.