Singapore based Semi-conductor maker Avago Technologies has recently agreed to buy LSI, a company that has a reputation in data center, storage, networking, manufacturing controllers. Last year, for storage drive makers, companies like Seagate and LSI enjoyed a rapid grown.
This acquisition is huge. Avago would be taking a $4.6 Billion load from a group of banks and will be giving $1 Billion in cash. The remaining $1 Billion will be invested by Silver Lake Partners as a ‘seven year convertible note’.
Though LSI is known in storage business, its being speculated that the company is being acquired to focus on networking. Intel recently acquired a networking called Mindspeed Technologies for an undisclosed amount. Regardless, LSI’s expertise and years of presence in the storage business is a major 1up for Avago. This news had a positive effect on NASDAQ as Avago’s share price got a 11% jump of $50.55, LSI enjoyed a jump of 39% to $10.99. Seagate and Western Digital also got a boost of about 3%.