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Intellectual Property Cores
News Release from: LSI Europe
Edited by the Electronicstalk Editorial
Team on 08 December 2006
LSI Logic and Agere Systems to combine
LSI Logic and Agere Systems have entered into a definitive merger agreement under which the companies will be combined in an all stock transaction with an equity value of approximately US $4 billion.
LSI Logic and Agere Systems have entered into a definitive merger agreement under which the companies will be combined in an all stock transaction with an equity value of approximately US $4 billion Under the terms of the agreement, Agere shareholders will receive 2.16 shares of LSI for each share of Agere they own
This article was originally published on Electronicstalk on 23 May 2001 at 8.00am (UK)
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Based on the closing stock price of LSI on 1st December 2006, this represents a value to Agere shareholders of US $22.81 per share.
The combined company, to be called LSI Logic Corporation, will offer a comprehensive set of building block solutions including semiconductors, systems and related software for storage, networking and consumer electronics products.
The companies had combined revenue of US $3.5 billion for the 12 months ended 30th September 2006.
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The companies operate in more than 20 countries, with a combined workforce of approximately 9100 employees, including nearly 4300 engineers.
The companies together own a substantial patent portfolio consisting of more than 10,000 issued and pending US patents.
Going forward, the new LSI expects to be well positioned to deliver significant benefits to its customers, shareholders and employees.
By leveraging its increased scale, expanded IP portfolio and integrated workforce, LSI anticipates being a stronger, more competitive innovator of core technology and building block solutions that enable businesses and consumers to store, protect and stay connected to their information and digital content.
"LSI and Agere share a rich heritage of innovation and thought leadership in creating enabling technologies that bring people and information together", said Abhi Talwalkar, LSI Logic President and Chief Executive Officer.
"By joining forces, we expect the combined scale to enable us to extend our franchises in our market segments, realise significant synergies and better serve the needs of our collective customers, shareholders and employees".
"Together, the two companies should be well positioned to achieve greater success", said Richard Clemmer, Agere Systems President and Chief Executive Officer.
"The complementary products and capabilities of each can enable the combined company to pursue significant new opportunities while delivering more value to customers".
Agere shareholders, employees and customers will benefit from the synergies and enhanced growth prospects that are anticipated to result from a larger, more competitive organisation.
"The combination of LSI and Agere is anticipated to create a semiconductor and storage systems powerhouse with an unparalleled innovation pipeline and a broad array of competitive, customer valued products and solutions in large and growing markets.
LSI's well established presence in the storage and consumer electronics markets and Agere's broad footprint in storage, mobility and networking should enable the combined company to drive sustainable long term growth and shareholder value through the strengthening of its combined platforms and the expansion of its existing customer relationships.
"As valued Seagate partners, both Agere and LSI play an important role in providing products that help us deliver our industry leading hard disc drives", said Bill Watkins, Seagate Technology Chief Executive Officer.
"We are excited by the innovative possibilities that this new combination represents".
Under the terms of the agreement, Agere shareholders will receive 2.16 shares of LSI common stock for each share of Agere stock they own.
Based on the closing stock price of LSI on 1st December 2006, the total consideration to Agere shareholders would be approximately US $4.0 billion or US $22.81 per share.
On closing, LSI will issue approximately 379 million shares on a diluted basis to complete the transaction.
At that time, LSI and Agere shareholders will own approximately 52 percent and 48 percent, respectively, of the combined company.
The combined company also expects to realise substantial cost savings beginning in 2007, with annual cost savings reaching at least US $125 million in 2008 from increased efficiencies in manufacturing and operating expenses.
The transaction is expected to be slightly dilutive in 2007 and meaningfully accretive in 2008 to LSI's earnings per share, on a non GAAP basis.
LSI President and Chief Executive Officer Abhi Talwalkar will serve as president and chief executive officer of the new company, which will be headquartered in Milpitas, California, and will maintain a significant presence in Allentown, Pennsylvania with various other locations worldwide.
LSI Non Executive Chairman James Keyes will continue as Non Executive Chairman of the board of directors of the new company, which will be comprised of nine members, with six being designated by LSI and three being designated by Agere.
The transaction is subject to the approval of shareholders from both companies as well as customary closing conditions and regulatory approvals.
The companies expect the transaction to close in the first calendar quarter of 2007.
Shares of the combined company will trade on the NYSE under the symbol LSI.
Morgan Stanley acted as financial advisor and Wilson Sonsini Goodrich and Rosati acted as legal counsel to LSI.
Goldman Sachs acted as financial advisor and Skadden, Arps, Slate, Meagher and Flom acted as legal counsel to Agere.
LSI also announced that its board of directors has authorised a stock repurchase programme of up to US $500 million.
The repurchases will be funded from available cash and short term investments.
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