LSI, Agere Merge in $4B Deal
By Colleen Taylor -- EDN, December 4, 2006
In a major merger announcement today, Milpitas, Calif.-based LSI Logic Corp. and Allentown, Pa.-based Agere Systems Inc. said they have entered into a definitive agreement under which the companies will be combined in an all-stock transaction with an equity value of approximately $4 billion.
Under the terms of the agreement, Agere shareholders will receive 2.16 shares of LSI for each share of Agere they own. Based on the closing stock price of LSI on December 1, this represents a value to Agere shareholders of $22.81 per share, the companies said. LSI will be taking the upper hand in the deal: LSI and Agere shareholders will own approximately 52 percent and 48 percent, respectively, of the combined company.
Agere, which announced last month it was finally back in the black, went through a rocky year financially.
The combined company, to be called LSI Logic Corp., will offer semiconductors, systems and related software for storage, networking and consumer electronics products. The companies operate in more than 20 countries, with a combined workforce of approximately 9,100 employees.
"By joining forces, we expect the combined scale to enable us to extend our franchises in our market segments, realize significant synergies and better serve the needs of our collective customers, shareholders and employees," Abhi Talwalkar, LSI Logic's president and CEO, said in a statement.
Talwalkar will serve as president and CEO of the new company, which will be headquartered in Milpitas, Calif., and will maintain a significant presence in Allentown, Pa., with various other locations worldwide. LSI's 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 Q1 2007.
Shares of the combined company will trade on the NYSE under the symbol "LSI."
Evidently part of a major Q4 push, this is the second major coup for LSI in as many weeks. On Nov. 22, LSI Logic spent $7 million to acquire India-based consumer electronics technology provider Metta Technology Inc.
