The acquisition is designed to enhance LSI's position in the fast-growing server and storage PCIe flash adapter market.
LSI, which specializes in networking and storage software and
semiconductors, is planning to buy SandForce, which makes flash storage
processors for enterprise and client flash solutions and solid-state
drives. Under the agreement announced Oct. 26, LSI will pay
about $322 million, and will assume about $48 million of
unvested stock options and restricted shares held by SandForce
SandForce's products, which boast the company's DuraClass
technology, include flash storage processors at the heart of PCIe flash
adapters and SSDs. The acquisition is designed to enhance LSI's
position in the fast-growing server and storage PCIe flash adapter
market, where the WarpDrive family of products from LSI already uses
SandForce flash storage processors. The transaction is expected to
close early in the first quarter of 2012 subject to customary closing
conditions and regulatory approvals. Upon closing, the SandForce team
will become part of LSI's newly formed Flash Components Division, with
SandForce President and CEO Michael Raam as general manager.
"The combination of SandForce and LSI allows us to deliver
differentiated solutions in the PCIe flash adapter segment by tightly
integrating flash memory and management," Raam said in a statement. "In
addition, leveraging our flash storage processors with LSI's
comprehensive IP portfolio and leading-edge silicon design platforms
will lead to innovative solutions."
Founded in 2006, SandForce was initially funded by leading venture
capital investors DCM and Storm Ventures and later joined by Translink
Capital and Canaan Partners. The company's SSD Processors use DuraClass
technology with Redundant Array of Independent Silicon Elements (RAISE)
and DuraWrite technologies to drive deployment of volume flash memory
into primary and I/O intensive data storage applications. To date,
SandForce has shipped well more than 2 million SSD processors through
more than 30 SandForce Driven and other SSD manufacturers in 18 months.
RAISE technology writes data across multiple flash die to enable
recovery from a failure in a sector, page or entire block, just like
the concept of multi-drive RAID used in disk-based storage. However,
RAISE only requires a single drive. One of DuraClass' key features is
DuraWrite, which optimizes the number of program cycles to the flash,
along with Recycler, which intelligently performs garbage collection
with a minimal impact on flash endurance.
"Flash-based solutions are critical for accelerating application
performance in servers, storage and client devices," LSI President and
CEO Abhi Talwalkar said in a statement. "Adding SandForce's
technology to LSI's broad storage portfolio is consistent with our
mission to accelerate storage and networking. The acquisition
represents a significant, rapidly growing market opportunity for LSI
over the next several years."
Earlier this week, LSI reported results for its third quarter,
noting revenues from continuing operations of $547 million, in line
with guidance, compared to $453 million generated from continuing
operations in the third quarter of 2010, and compared to $501 million
generated from continuing operations in the second quarter of 2011. The
company noted its fourth quarter outlook, with projected revenues from
continuing operations of $500 million to $550 million, reflects supply
chain impacts and uncertainties due to recent flooding in Thailand.