LSI Corporation (LSI) to be Acquired by Avago Technologies for $6.6 Billion
PUBLISHED ON: Dec 17, 2013
Shares of LSI Corporation (LSI) were up +3.05 or +38.6 percent to close at $10.96 per share on Monday, after news the company entered into an agreement to be taken over by Singapore based Avago Technologies Limited (AVGO) for $11.15 per share. The acquisition will create a highly diversified company, which will lead the semiconductor market with over $5 billion in annual revenues.
The all-cash transaction is valued at $6.6 billion and will add storage capacity to Avagoâ s wired infrastructure, wireless and industrial businesses. The new company will be in a strong position to take advantage of new opportunities in mobile data transfer and Internet Protocol data centers.
San Jose, California based LSI Corporation was originally founded as LSI Logic in 1981 by former Fairchild Semiconductor CEO Wilfred Corrigan. The company specializes in designing semiconductors and software for accelerated storage and datacenter networking, mobile networks and client computing. The deal will be funded by Avago with a $4.6 billion loan from several banks along with a $1 billion investment from Silver Lake Partners, a private equity group, and $1 billion from Avagoâ s cash in hand. The $11.15 price for LSI is a 41 percent premium over last Fridayâ s closing price. Avago, with headquarters in both Singapore and San Jose is a leader in the design and production of analog semiconductors. Avago said that the deal will immediately add to free cash flow and EPS, and could save as much as $200 million in annual costs by the end of its 2015 fiscal year, the first full year after closing the deal. In a joint press release with Avago, LSI Chief Executive Abhi Talwalkar said that, â