Avago Technologies is to acquire semiconductor firm LSI Corporation in a deal worth $6.6bn, to help boost its enterprise storage offerings.
The deal will be funded by a combination of $4.6bn from banks, $1bn in cash from Avago and £1bn from investor firm Silver Lake Partners. Avago said it was willing to make such a huge outlay for LSI as it sees its offerings as the perfect addition to its portfolio of offerings.
Avago chief executive Hock Tan said: "This highly complementary and compelling acquisition positions Avago as a leader in the enterprise storage market and expands our offerings and capabilities in wired infrastructure, particularly system-level expertise. This combination will increase the company's scale and diversify our revenue and customer base."
In particular, Avago said it would place it to capitalise on new growth areas including data centre infrastructure kit and meeting the storage and networking demands from mobile data traffic. This was an area the CEO of LSI Abhi Talwalkar said would be important too for the newly merged firm.
“Our leadership positions in enterprise storage and networking, in combination with Avago, create greater scale to further drive innovations into the data centre," he said.
Avago components have been used in many key devices such as the iPhone 4S as the firm has expertise in delivering wired and wireless components that allow devices to latch onto networks around the world without issue.
The deal has been approved by both companies' boards of directors, but is still is subject to the approval of regulators and LSI's stockholders.
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