MILPITAS, Calif.--LSI Logic Corp. here today (March 26) announced plans to acquire C-Cube Microsystems Inc. for $878 million in stock to expand its product offering for communications, digital set-top boxes, and other entertainment applications.
The purchase is aimed at strengthening LSI Logic's position in consumer electronics applications by adding C-Cube's video compression technologies--including MPEG, which was pioneered by the company during the 1990s. C-Cube's customers include Sony, Samsung, LG Electronics, JVC, Motorola, Pace and Philips. Also based in Milpitas, C-Cube had revenues of $265 million in 2000.
The two companies said the merger of LSI Logic and C-Cube will provide a complete portfolio of technologies for high-growth cable, satellite, terrestrial and DSL set-top box markets.
"The acquisition of C-Cube will enhance LSI Logic's technology strengths in designing and manufacturing complete solutions for customers in rapidly growing communications and broadband entertainment markets," said Wilfred J. Corrigan, chairman and chief executive officer of LSI Logic. "Both companies bring complementary technologies and market channels to the broadband entertainment market."
Milpitas-based LSI Logic said the purchase is expected to be completed in the second quarter, and the transaction will be accretive to the company's earnings before goodwill amortization (EBG) in 2001.
C-Cube has been an early supplier of MPEG-based solutions for digital video systems. It is serving digital set-top boxes, DVD systems, and other coder-decoder (codec) applications, such as personal video recording (PVR), home media servers, recordable DVD, residential gateway and streaming video.
"LSI Logic complements C-Cube very well in achieving the leading position in the networked digital home," said Umesh Padval, president and CEO of C-Cube.
C-Cube employs 600 workers. In the fourth quarter of 2000, its sales were $74 million and it reported a net income of $7.0 million. In 2000, the company posted a net loss of $7.0 million on sales of $265 million, including a charge for closing its DiviCom unit.