Avago Technologies To Acquire LSI Corp. In $6.6 Bln Cash Deal - Quick Facts

(RTTNews) - Singapore-based chip maker Avago Technologies Limited (AVGO) announced Monday that it agreed to acquire Semiconductor company LSI Corp. (LSI) for $11.15 per share in an all-cash transaction valued at $6.6 billion.

The transaction has been approved by the boards of directors of both companies.

Avago stated that the acquisition creates a highly diversified semiconductor market leader with approximately $5 billion in annual revenues by adding enterprise storage to Avago's existing wired infrastructure, wireless and industrial businesses.

Avago expects that the transaction will be significantly and immediately accretive to its non-GAAP free cash flow and earnings per share. It currently anticipates achieving annual cost savings at a run rate of $200 million by the end of the fiscal year ending November 1, 2015, the first full fiscal year after closing.

As per the terms of the agreement, LSI's stockholders will receive $11.15 in cash for each share of LSI common stock they hold at closing, which is expected to occur during the first half of calendar 2014.

Avago noted that it plans to fund the transaction with $1.0 billion of cash from the combined balance sheet and fully-committed financing from the following sources: a $4.6 billion term loan from a group of banks; and a $1 billion investment from Silver Lake Partners, which is expected to be in the form of a seven year 2% convertible note with a conversion price of $48.04 per share or preferred stock with equivalent economic terms.

The transaction is subject to regulatory approvals in various jurisdictions and customary closing conditions, as well as the approval of LSI's stockholders.