LSI Logic snaps up Agere Systems for $4 bn

BANGALORE: Semiconductor solutions provider LSI Logic, headed by Intel veteran Abhi Talwalkar, has announced that it would acquire Agere Systems, the former chip division of Lucent Technologies for $4 billion in stock.

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, 2006, this represents a value to Agere shareholders of $22.81 per share.

While LSI's chips are found in hard drives, DVD recorders and other devices, the company does not have a strong play in mobile devices.

The Agere acquisition would boost LSI's business in chip solutions for cell phones, MP3 players and portable media devices.

The combined company, to be called LSI Logic Corporation, will offer a comprehensive set of building block solutions including semiconductors, systems and related software for storage, networking and consumer electronics products.

The companies had combined revenue of $3.5 billion for the 12 months ended September 30, 2006. The companies operate in more than 20 countries, with a combined workforce of approximately 9,100 employees, including nearly 4,300 engineers.

The companies together own a substantial patent portfolio consisting of more than 10,000 issued and pending US patents.

LSI Logic has been on a buying spree for the last two years and its most recent buy-out was an Indian company- Metta Technology this November.

“LSI and Agere share a rich heritage of innovation and thought leadership in creating enabling technologies that bring people and information together," said Talwalkar, LSI Logic president and chief executive officer. "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."

Talwalkar will serve as president and chief executive officer of the new company, which will be headquartered in Milpitas, California, and will maintain a significant presence in Allentown, Pennsylvania with various other locations worldwide.

LSI 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 the first calendar quarter of 2007.

Both companies have their R&D presence in India.

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