Former HP Chip Division Avago Buys LSI for $6.6 Billion
Storage networking chip maker LSI Corp., which has been busy acquiring other companies the past few years to gain market share, itself has been acquired.
Avago Technologies, a Singapore-based company that also makes processors that power both wireless and wired communications equipment, said Dec. 17 that it will acquire San Jose, Calif.-based LSI for $6.6 billion in cash.
LSI has been a survivor in the hot-and-cold semiconductor industry. It was founded in 1980 by former executives of now-defunct Fairchild Semiconductor, which also had other executives who went on to start Intel in the 1970s.
LSI is the No. 1 storage networking processor maker in the world by sales. Its main competitors have been China's Marvell Technology Group, NXP Semiconductor and ST Microelectronics. To a lesser extent, LSI competes against companies such as Nvidia and Intel.
To bolster itself against all those worthy market opponents, LSI over the past few years has bought small but forward-thinking companies such as solid-state storage makers SandForce, ONStor, SiliconStor and StoreAge; semiconductor maker Aquantia; and Ethernet networker Chelsio Communications.
Avago, which became public in 2009, is the former Hewlett-Packard semiconductor division that was part of the spinoff business that became Agilent Technologies in 1999.
Agilent and Avago subsequently separated six years later, with Avago moving its headquarters to Singapore. In 2005, it employed about 6,800 and was responsible for about a quarter of Agilent's revenue; nonetheless, it was not considered central to Agilent's plans going forward. Avago now has a market cap of about $11 billion.
LSI shareholders will receive $11.15 per share from the transaction, which equates to a premium of about 40 percent from the Dec. 13 closing share price of $7.94. Shares of Avago were up more than 16 percent, to $52.75, following news of the deal.