Avago to acquire storage chipmaker LSI for $6.6B

The buyout would allow Avago, which makes chips for Apple products, to enter the burgeoning storage chip space.

Avago said Monday it willl buy LSI for $6.6 billion, or $11.15 per share, as it aims to enter the storage chip market.

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The Singapore-based company, with offices in San Jose, California, among other things makes chips for Apple smartphones and tablets. LSI's chips are used in storage drives, like hard disks and solid-state drives.

Avago, in conjunction with investment firm Silver Lake, will inject $1 billion investment, alongside a $4.6 billion term loan from a coalition of banks. and $1 billion in cash, according to the companies.

In a statement, Avago said the acquisition creates a "highly diversified semiconductor market leader... by adding enterprise storage to Avago's existing wired infrastructure, wireless and industrial businesses."

The companies said the combined company following the acquisition will be "strongly positioned to capitalize on the growing opportunities created by the rapid increases in data center IP and mobile data traffic."

Avago ($AVGO) shares were up by more than 11 percent in pre-market trading, while ($LSI) was up close to 40 percent.


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