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Avago Technologies announced on December 16, 2013, that it would buy LSI Corporation for $11.15 per share in cash, valuing the transaction at approximately $6.6 billion. Avago completed the acquisition on May 6, 2014.
What Avago agreed to buy—and for how much
The agreement called for Avago to pay $11.15 in cash for each LSI share. The companies valued the transaction at approximately $6.6 billion. At the time of the announcement, Avago expected the deal to close in the first half of 2014, subject to approvals and other closing conditions. Avago and LSI’s December 16, 2013 announcement described the offer and timetable.
Why Avago said it wanted LSI
Avago presented the acquisition as a way to broaden its business beyond its existing portfolio. Its stated rationale was to add LSI’s enterprise-storage business, strengthen Avago’s wired-infrastructure capabilities, diversify revenue, and increase scale. These were the company’s strategic objectives, not independently established outcomes in the cited transaction materials.
The announcement projected approximately $5 billion in annual revenue for the combined company. Avago also forecast annual operating savings of $200 million at run rate by the end of fiscal 2015. The completion announcement reiterated the savings forecast, but the cited materials do not establish whether Avago achieved it. Avago’s May 6, 2014 completion announcement reports the forecast in connection with the closing.
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- Chipset: LSI SAS3008
- Firmware (FW) version: P16 (16.00.14.00) IT Mode
- Interface: 2 * SFF-8643 Internal 12Gbps, PCI-e 3.0 x8
- Package: controller card, full-height bracket, low-profile bracket
Approvals and planned financing
The deal required regulatory approvals, customary closing conditions, and approval by LSI stockholders. Avago and LSI said they would continue operating separately until the transaction closed. Their contemporaneous FAQ said, “The boards of both companies have unanimously approved the transaction.” The transaction FAQ gives the approval and operating details.
Avago’s transaction presentation described three planned funding sources:
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- Compatible with: LSI 9300-8i; Controller: LSI/Broadcom SAS3008 (12Gb/s SAS)
- Firmware (FW): HBA IT Mode (Non-RAID); Data Transfer Rate: up to 12Gbps SAS, SATA 6Gbps
- Host Interface: PCIe 3.0 x8; Internal Connectors: 2× Mini-SAS HD SFF-8643. --Direct attach up to 8 drives, and expand via external SAS Expander for large arrays
- PERFECT FOR: ZFS, FreeNAS/TrueNAS, unRAID, Proxmox, ESXi home-lab & NAS storage
- Packing List: HBA Card ×1; 2× SFF-8643 to 4× SATA cables (8× SATA ends). --Cables in box are for SATA drives. They are not compatible with SAS drives. To connect SAS drives, use SFF-8643 to 8482 SAS cables (sold separately) or our matched HBA + cable kit.
- Approximately $1 billion in cash.
- A fully committed $4.6 billion term loan.
- A $1 billion investment by Silver Lake Partners.
Those figures describe the financing presented at announcement. In its later filing about the completed acquisition, Avago specified that Silver Lake’s funding was in the form of seven-year notes bearing 2% interest and convertible into common stock. The completion filing provides that detail.
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From announcement to completed acquisition
| Milestone | What was reported |
|---|---|
| December 16, 2013 | Avago announced the all-cash offer of $11.15 per LSI share, with an approximate transaction value of $6.6 billion. |
| Expected timing at announcement | Avago expected the transaction to close in the first half of 2014, subject to approvals and customary conditions. |
| May 6, 2014 | Avago announced that it had completed its acquisition of LSI. |
The announced timetable and final closing date are reported in the 2013 announcement and 2014 completion release. The announcement and closing materials document the transaction and Avago’s forecasts; they do not, by themselves, demonstrate that the projected revenue or savings targets were later realized.
Quick Recap
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- 12Gb/s SATA+SAS
- LSI SAS3408
- PCI E 3.0
- TWO mini-SAS HD SFF8644
- IT Mode
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- x8 Lane PCI Express 3.0
- 1024 Non-RAID SATA/SATA Devices Per Controller
- 6 x Mini SAS HD SFF 8643
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Rank #3
- Compatible with: LSI 9300-8i & 9211-8i; Controller: Broadcom/LSI SAS3008 (12Gb/s SAS3, 8-port)
- Firmware (FW): HBA IT Mode (Non-RAID); Data Transfer Rate: up to 12Gbps SAS, SATA 6Gbps
- Host Interface: PCIe 3.0 x8; Internal Connectors: 2× Mini-SAS HD SFF-8643. --Direct attach up to 8 drives, and expand via external SAS Expander for large arrays
- PERFECT FOR: ZFS, FreeNAS/TrueNAS, unRAID, Proxmox, ESXi home-lab & NAS storage
- Packing List: HBA Card: 1; SFF-8643 to 4× SATA Cables: 2. Cables in box are for SATA drives. --They are not compatible with SAS drives. To connect SAS drives, use SFF-8643 to SFF-8482 cables (sold separately) or our matched HBA + cable kit
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