Stockholders to get $11.15 in cash for each common share, the news release says. Job security isn't addressed, but efficiencies are sought.
LSI Corp., which has a long, if fragmented history under various names in the Lehigh Valley and still has operations in Hanover Township, Lehigh County, is being sold for $6.6 billion to Avago Technologies, according to a news release this morning.
LSI's stockholders will receive $11.15 in cash for each share of common stock. The deal, which has been approved by the boards of both companies, is expected to close in the first half of 2014, the news release said.
The release did not address if local jobs would be lost, although it does address improving LSI's operating margins.
The Avago website lists headquarters in San Jose, Calif; Fort Collins, Colo.; Singapore; and Penang, Malasia.
LSI, which is listed on the Nasdaq, designs semiconductors and software for data centers, mobile networks and client computing, the news release said. Avago, which is also listed on the Nasdaq, provides a range of analog semiconductor devices, the release said.Avago is using $1 billion in cash from the combined balance sheets, $4.6 billion in bank financing and $1 billion from Silver Lake Partners to make the purchase, the release said.
"This highly complementary and compelling acquisition positions Avago as a leader in the enterprise storage market and expands our offerings and capabilities in wired infrastructure, particularly system-level expertise," Hock Tan, president and chief executive officer of Avago, said in the release. "This combination will increase the company's scale and diversify our revenue and customer base. In addition to these powerful strategic benefits, as we integrate LSI onto the Avago platform, we expect to drive LSI's operating margins toward Avago's current levels, creating significant additional value for stockholders."
The deal is expected to increase Avage's per-share earnings and lead to $5 billion in annual revenue, the release said.
"This transaction provides immediate value to our stockholders, and offers new growth opportunities for our employees to develop a wider range of leading-edge solutions for customers," Abhi Talwalkar, president and chief executive officer of LSI, said in the release. "Our leadership positions in enterprise storage and networking, in combination with Avago, create greater scale to further drive innovations into the data center."
In March 2007, shareholders of Agere Systems Inc. approved a merger with Milpitas, Calif.-based LSI Logic Corp.
Agere, which manufactured tiny semiconductor chips used in cellphones, computers, hard drives and other equipment, was spun off from Lucent Technologies Corp. in 2001 and traces its roots to Allentown and Bell Laboratories, Western Electric and AT&T.
According to a 2007 story, LSI designs chips used in DVD players, data-storage gear, handheld music players and TV set-top boxes.
Archives editor KJ Frantz contributed to this report.