LSI Logic and Agere Systems to Merge in All-Stock Transaction Valued at Approximately $4.0 Billion

LSI Announces $500 Million Stock Repurchase Program

MILPITAS, Calif., and ALLENTOWN, Pa., Dec. 4 /PRNewswire-FirstCall/ -- LSI Logic Corporation (NYSE: LSI) and Agere Systems Inc. (NYSE: AGR) today announced that they have entered into a definitive merger agreement under which the companies will be combined in an all-stock transaction with an equity value of approximately $4.0 billion. 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.


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 U.S. patents.

Going forward, the new LSI expects to be well positioned to deliver significant benefits to its customers, shareholders and employees. By leveraging its increased scale, expanded IP portfolio and integrated workforce, LSI anticipates being a stronger, more competitive innovator of core technology and building block solutions that enable businesses and consumers to store, protect and stay connected to their information and digital content.

"LSI and Agere share a rich heritage of innovation and thought leadership in creating enabling technologies that bring people and information together," said Abhi 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."

"Together, the two companies should be well positioned to achieve greater success," said Richard Clemmer, Agere Systems president and chief executive officer. "The complementary products and capabilities of each can enable the combined company to pursue significant new opportunities while delivering more value to customers. Agere shareholders, employees and customers will benefit from the synergies and enhanced growth prospects that are anticipated to result from a larger, more competitive organization."

The combination of LSI and Agere is anticipated to create a semiconductor and storage systems powerhouse with an unparalleled innovation pipeline and a broad array of competitive, customer-valued products and solutions in large and growing markets. LSI's well-established presence in the storage and consumer electronics markets and Agere's broad footprint in storage, mobility and networking should enable the combined company to drive sustainable long- term growth and shareholder value through the strengthening of its combined platforms and the expansion of its existing customer relationships.

"As valued Seagate partners, both Agere and LSI play an important role in providing products that help us deliver our industry-leading hard disc drives," said Bill Watkins, Seagate Technology chief executive officer. "We are excited by the innovative possibilities that this new combination represents."

About the Transaction

Under the terms of the agreement, Agere shareholders will receive 2.16 shares of LSI common stock for each share of Agere stock they own. Based on the closing stock price of LSI on December 1, 2006, the total consideration to Agere shareholders would be approximately $4.0 billion or $22.81 per share. Upon closing, LSI will issue approximately 379 million shares on a diluted basis to complete the transaction. At that time, LSI and Agere shareholders will own approximately 52% and 48%, respectively, of the combined company.

The combined company also expects to realize substantial cost savings beginning in 2007, with annual cost savings reaching at least $125 million in 2008 from increased efficiencies in manufacturing and operating expenses. The transaction is expected to be slightly dilutive in 2007 and meaningfully accretive in 2008 to LSI's earnings per share, on a non-GAAP basis.

LSI president and chief executive officer Abhi 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.

Shares of the combined company will trade on the NYSE under the symbol "LSI."

Morgan Stanley acted as financial advisor and Wilson Sonsini Goodrich & Rosati acted as legal counsel to LSI. Goldman, Sachs & Co. acted as financial advisor and Skadden, Arps, Slate, Meagher & Flom acted as legal counsel to Agere.

LSI Stock Repurchase Program

LSI also announced today that its board of directors has authorized a stock repurchase program of up to $500 million. The repurchases are expected to be funded from available cash and short-term investments.

Conference Call and Webcast Information

The companies will hold a joint conference call and webcast today at 8 a.m. EST to discuss this announcement.

The conference call can be monitored by dialing 1-866-202-1971 within the U.S. and 1-617-213-8842 for all other locations, passcode 61605753.

The webcast can be accessed at and

A telephonic replay of the December 4 conference call will be available the same day beginning at approximately 10:00 a.m. EST and can be accessed through December 8. The replay access numbers are 1-888-286-8010 within the U.S. and 1-617-801-6888 for all other locations, passcode 15043040. The webcast will be archived at and

LSI will also be participating in the upcoming Lehman Brothers Global Technology Conference in San Francisco, California on December 7, 2006.

About LSI Logic

LSI Logic Corporation (NYSE: LSI) is a leading provider of silicon-to- system solutions that are used at the core of products that create, store and consume digital information. LSI offers a broad portfolio of capabilities including custom and standard product ICs, host bus and RAID adapters, storage area network solutions and software applications. LSI products enable leading technology companies in the Storage and Consumer markets to deliver some of the most advanced and well-known electronic systems in the market today. More information is available at

About Agere Systems

Agere Systems is a global leader in semiconductors and software solutions for storage, mobility, and networking markets. The company's products enable a broad range of services and capabilities, from cell phones, PCs, and hard disk drives to the world's most sophisticated wireless and wireline networks. Agere's customers include manufacturers of consumer electronics and communications and computing equipment. Agere works to transform the performance of networks and consumer electronics by integrating systems knowledge and leading technology that enable people to stay connected - perfecting the connected lifestyle. More information is available at

About Non-GAAP Financial Measures

Non-GAAP financial measures exclude gain or loss from the sale of, and income or loss from, discontinued operations; restructuring-related charges included in costs; primarily increased depreciation; certain other non-cash charges including equity compensation; net restructuring and other charges; purchased in-process research and development charges, amortization of acquired intangible assets, net gain or loss from the sale of operating assets, certain tax adjustments, cumulative effect of accounting changes, and certain nonrecurring charges.

1 | 2  Next Page »


Review Article Be the first to review this article

Featured Video
Latest Blog Posts
Bob Smith, Executive DirectorBridging the Frontier
by Bob Smith, Executive Director
You’re Invited! CEO Outlook May 18
Anupam BakshiAgnisys Automation Review
by Anupam Bakshi
Automating the UVM Register Abstraction Layer (RAL)
Electronics Engineer for Lockheed Martin at Sunnyvale, California
Technical Product Manager- SISW-EDA 238452 for Siemens AG at Fremont, California
Pre-silicon Design Verification Engineer for Intel at Santa Clara, California
SerDes Applications Design Engineer for Xilinx at San Jose, California
ASIC SoC Verification Engineer for Ericsson at Austin, Texas
ASIC Engineer for Juniper Networks at Sunnyvale, California
Upcoming Events
Virtual ASMC 2021 at United States - May 10 - 12, 2021
DVCon China 2021 at Shanghai China - May 26, 2021
CadenceLIVE Americas 2021 at United States - Jun 8 - 9, 2021
DesignCon 2021 at San Jose McEnery Convention Center San Jose, CA San Jose CA - Aug 16 - 18, 2021

© 2021 Internet Business Systems, Inc.
670 Aberdeen Way, Milpitas, CA 95035
+1 (408) 882-6554 — Contact Us, or visit our other sites:
AECCafe - Architectural Design and Engineering TechJobsCafe - Technical Jobs and Resumes GISCafe - Geographical Information Services  MCADCafe - Mechanical Design and Engineering ShareCG - Share Computer Graphic (CG) Animation, 3D Art and 3D Models
  Privacy PolicyAdvertise