Applied Micro Circuits to Buy MMC

Applied Micro Circuits Corp., whose chips speed data traffic on fiber-optic networks, on Sunday agreed to buy microprocessor designer MMC Networks Inc. for about $4.5 billion in stock to fill a gap in its product line.

San Diego-based Applied Micro will issue 0.619 share for each MMC share. That values Sunnyvale, Calif.-based MMC at $116.72 a share, a 49% premium to its closing price Friday of $78.25 on Nasdaq.

The purchase comes after similar moves by some of Applied Micro’s top rivals, such as PMC-Sierra Inc. and Vitesse Semiconductor Corp., to buy network-equipment chip makers in an effort to offer a more complete set of chips to customers such as Nortel Networks Corp.