Avago Technologies announced on December 16, 2013, that it would acquire LSI Corporation for $11.15 per share in cash, valuing the transaction at approximately $6.6 billion. The deal closed on May 6, 2014. At the time, Avago said the acquisition would expand its enterprise-storage and wired-infrastructure businesses; its projected revenue and cost-savings figures were company forecasts, not confirmed results.
What Avago agreed to pay
The proposed purchase price was $11.15 in cash for each LSI share, with the transaction valued at approximately $6.6 billion. Avago and LSI announced the agreement on December 16, 2013. The companies initially expected it to close in the first half of 2014.
Avago’s announcement described the transaction as an all-cash acquisition. The purchase was not completed at announcement: it remained subject to approvals and other closing conditions.
Why Avago said it wanted LSI
Avago presented the acquisition as a way to add LSI’s enterprise-storage business and strengthen its wired-infrastructure capabilities. It also said the combination would diversify revenue and increase the company’s scale. These were Avago’s stated strategic aims, rather than independently demonstrated outcomes.
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The announcement projected approximately $5 billion in annual revenue for the combined company. Avago also expected annual operating savings to reach a $200 million run rate by the end of fiscal 2015. The announcement and closing materials cited here do not establish whether that savings target was achieved.
Approvals and proposed financing
The agreement required regulatory approvals, LSI stockholder approval, and customary closing conditions. The companies said they would continue to operate separately until the transaction closed. Their contemporaneous FAQ said, “The boards of both companies have unanimously approved the transaction.” Board approval did not replace the remaining conditions.
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In its transaction presentation, Avago described a financing plan comprising approximately $1 billion in cash, a fully committed $4.6 billion term loan, and a $1 billion investment from Silver Lake Partners. The completion filing later identified the Silver Lake funding as seven-year, 2% convertible notes. These details describe the financing associated with the deal, not additional amounts paid to LSI shareholders.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.The deal closed in May 2014
Avago completed its acquisition of LSI on May 6, 2014, within the first half of the year as initially anticipated. The closing confirmed that the proposed transaction went through; it does not by itself verify the company’s earlier revenue projection or operating-savings forecast.
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At the time of the announcement and closing, the acquirer was Avago Technologies. Historical releases are now hosted on Broadcom’s investor-relations site, but that later hosting does not change the identity of the company that announced and completed the acquisition.
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