LSI to acquire SandForce for $370 million
10/26/2011 5:56 PM EDT
SANTA CLARA, Calif.—Chip maker LSI Corp. said Wednesday (Oct. 26) it signed a definitive agreement to acquire SandForce Inc., a supplier of flash processors for solid state drives, in a deal worth about $370 million.
LSI (Milpitas, Calif.) will pay about $322 million in cash—net of cash assumed from SandForce—and assume about $48 million worth of unvested stock options and restricted shares held by SandForce employees, the company said.
"Adding SandForce's technology to LSI's broad storage portfolio is consistent with our mission to accelerate storage and networking," said Abhi Talwalkar, LSI president and CEO, in a statement. "The acquisition represents a significant, rapidly growing market opportunity for LSI over the next several years."
The transaction is expected to close early in the first quarter of 2012, LSI said. It is subject to customary closing conditions and regulatory approvals, the company said. Upon closing, the SandForce team will become part of LSI's newly formed Flash Components division, with Michael Raam, SandForce president and CEO, serving as general manager, LSI said.
LSI has previously been among several firms which backed SandForce over three funding rounds. The list of investors also included foundry United Microelectronics Corp.'s venture capital arm, UMC Capital.
Also Wednesday, LSI reported that third quarter sales grew to $546.9 million, an increase of 9 percent compared to the second quarter and an increase of 21 percent year-to-year. The company reported a net income for the quarter of $29.3 million, down from $293.8 million in the second quarter but up from $23.4 million in the third quarter of 2010.
For the fourth quarter, LSI said it expects sales to be between $500 million and $550 million.