Avago Technologies’ planned $6.6 billion cash acquisition of LSI could be felt in Colorado, where LSI has about 650 employees, but officials with the company said their fate has not been determined.
Avago Technologies (NASDAQ: [[ticker:AVGO]]) makes and sells analog semiconductor devices, while LSI (NASDAQ: [[ticker:LSI]]) designs semiconductors and software for storage and networking in datacenters, mobile networks, and client computing.
Avago announced the deal Monday and said it will result in a company with nearly $5 billion per year in revenue and a highly diversified product line that includes enterprise storage, a key market for LSI.
LSI shareholders will get $11.15 in cash per share when the deal closes, which is expected to happen during the first six months of 2014. Avago will pay for the acquisition with $1 billion in cash, a $1 billion investment from Silver Lake Partners, and $4.6 million in debt.
The deal is big news for the semiconductor industry, which employs thousands in Colorado. For its part, Avago reportedly employs about 870 people in Fort Collins, where it makes semiconductors for smartphones.
LSI has facilities in Colorado Springs, Fort Collins, and Longmont, where it employs 350 people, 175 people, and 126 people respectively, according to company spokesman Dave Miller.
“Most of the activities in Colorado are focused around creating storage technologies for enterprise datacenters,” Miller said.
It’s likely good news for those employees that, in announcing the sale, Avago CEO Hock Tan singled out enterprise storage as the key part of LSI that Avago will add to its lineup. He also called the companies complementary in a letter to LSI employees that was filed with the SEC.
He reiterated the message in his call with analysts going over details of the sale. “I think in some ways the beautiful thing is the lack of overlap,” Tan said.
But the closing and integration process will take several months, and Miller said the specific affects in Colorado remain to be seen.
“We have not begun the integration process with Avago so it is way too early to speculate on what, if any, impact there might be on our Colorado operations,” he said.
