MILPITAS, Calif.-Chipmaker LSI Logic Corp. jumped into the wireless arena by scooping up Agere Systems Inc., a mobile phone chip producer.
LSI develops chips for hard drives and DVD recorders, while Agere competes in the communications chip market against powerhouses such as Texas Instruments Inc. and Freescale Semiconductor Inc. The combined portfolios of LSI and Agere will offer chips and software for storage, networking and consumer electronic products.
The companies posted combined revenue of $3.5 billion for the 12 months ended Sept. 30, and they said they expect increased efficiencies in manufacturing and operating expenses to generate approximately $125 million in savings in 2008.
The all-stock deal is worth about $4 billion and will give LSI shareholders 52 percent ownership of the combined company, which is to be called LSI Logic Corp. The pair said their combined workforce will include 9,100 employees, including nearly 4,300 engineers, and will be headquartered in Milpitas, Calif., though a “significant presence” in Allentown, Penn. will also be maintained, along with various locations worldwide.
The transaction is set to close during the first quarter of next year,
LSI also said it is planning a $500 million stock repurchase program to be funded with cash and short-term investments.
News of the acquisition sent Agere’s stock price up $1.96 to $19.75 per share, whereas LSI’s stock dropped $1.23 to $9.33 per share.
