Cavium To Buy QLogic In Deal Valued At $1.36 Bln

(RTTNews) - Semiconductor maker Cavium Inc. (CAVM) has agreed to buy QLogic Corp. (QLGC) in a deal that values the networking infrastructure maker at about $1.36 billion, including $355 million in cash.

Shares of Cavium slipped a near 9 percent in the after-hours trade, while QLogic shares jumped 11 percent, following the news.

Cavium has agreed to buy Qlogic's shares at about $15.50 per share, which includes $11.00 per share in cash and 0.098 of a share of Cavium stock for each QLogic share held.

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

Cavium noted that the acquisition provides opportunity to drive significant growth at scale in data center and storage markets, as QLogic's connectivity and storage solutions is complementary to Cavium's networking, compute, and security solutions.

Cavium sees the deal to be accretive to its adjusted earnings by $0.60 to $0.70 in 2017.

"Today's acquisition of QLogic is highly complementary and strategic to Cavium and it creates a diversified pure-play infrastructure semiconductor leader," stated Syed Ali, President and Chief Executive Officer of Cavium.

Cavium intends to finance the acquisition using a combination of $220 million cash, $750 million of financing, and $400 million in new Cavium equity.

QLGC closed Wednesday's trading at $13.54, down $0.13 or 0.95%, on the Nasdaq. The stock, however, gained $1.56 or 11.52% in the after-hours trade.

CAVM closed Wednesday's trading at $48.00, up $1.76 or 3.81%, on the Nasdaq. The stock, however, dropped $4.00 or 8.33% in the after-hours trade.