Avago Technologies To Buy PLX Technology In $309 Mln Deal

(RTTNews) - Singapore-based chip maker Avago Technologies Ltd. (AVGO) agreed Monday to acquire U.S.-based peer PLX Technology, Inc. (PLXT) for $6.50 per share in an all-cash deal valued at around $309 million, or $293 million net of cash and debt acquired.

The deal, which has the approval of boards of directors of both companies, is expected to close in the fourth quarter ending November 3, 2014.

"The core PLX PCIe silicon business fits very well with the Avago business model and broadens Avago's portfolio serving the enterprise storage and networking end markets," Avago President and CEO Hock Tan said in a statement.

PLX is a provider of semiconductor-based PCI Express connectivity solutions predominantly for enterprise data centers.

The deal will see PLX PCI Express portfolio products complement Avago's server storage connectivity and networking ASIC products to support next generation data center architectures. Avago said it is committed to continue to invest in the PLX PCI Express platform.

The offer price represents a 9.4 percent premium over PLX's closing share price of $5.94 on Friday. Sunnyvale, California-based PLX's stock is currently trading higher by 9.01 percent in early deals in a bid to match the offer price.

Avago said it expects to fund the deal with cash available on its balance sheet. The deal will immediately add to Avago's adjusted earnings per share.

Avago also anticipates "driving the PLX business to a level consistent with Avago's long term business model by the end of fiscal year 2015."

The closure of the deal is primarily subject to shares representing at least a majority of the outstanding shares of PLX common stock, on a fully diluted basis, being tendered into the offer.

PLX's biggest shareholder, Potomac Capital Partners II, L.P., certain senior members of the PLX management team and all of the directors PLX, collectively owning about 14.7 percent of shares outstanding on fully diluted basis, have agreed to tender their share into the offer.

Meanwhile, Discovery Group I, LLC, the second largest stockholder of PLX, has informed PLX that it supports the transaction.

"Once closed, this transaction will provide immediate value to our stockholders and offers new growth opportunities for our employees to develop leading-edge solutions for our customers," PLX President and CEO David Raun stated.

Avago in early May completed its acquisition of semiconductor company LSI Corp. (LSI) for $11.15 per share in an all-cash deal valued at $6.6 billion. The deal was agreed upon in mid-December. The deal expands Avago's product offerings and brings system-level expertise in its wired infrastructure market, positioning Avago as a leader in the enterprise storage market. Avago's stock was also recently added to the S&P 500, replacing LSI Corp.

In Monday's regular trading session, AVGO is currently trading at $71.11, down $0.46 or 0.65% on a volume of 0.37 million shares, while PLXT is currently trading at $6.47, up $0.53 or 9.01% on a volume of 6.23 million shares.