Cavium to Buy Networking Products Company QLogic
June 15 2016 - 11:40PM
Dow Jones News
Semiconductor products company Cavium Inc. has agreed to buy
QLogic Corp., a maker of adapters, switches and other networking
products.
The deal, which has an enterprise value of about $1 billion,
will enhance Cavium's data-center and storage business and is
projected to boost 2017 adjusted earnings per share by 60 cents to
70 cents.
The cash-and-stock deal has an equity value of about $1.36
billion, inclusive of about $355 million of QLogic's balance sheet
cash, based on Cavium's stock price in recent days. It is valued at
about $15.50 a share, a 14% premium to QLogic's Wednesday closing
price.
Cavium said the deal would provide "substantial customer and
revenue diversification."
The company expects to realize $45 million of synergies by the
end of 2017.
In a tender offer, each QLogic share will be exchanged for $11
in cash and 0.098 of a Cavium share. The deal is expected to close
during the third quarter.
Cavium products, which include ThunderX processors and XPliant
switches, are used for networking, data center and wireless
applications. Cavium's revenue last year was $412.7 million.
QLogic's revenue was $458.9 million for its fiscal year ended
April 3.
Margin pressure has contributed to a wave of consolidation in
the semiconductor industry. Avago Technologies Ltd. bought Broadcom
Corp. for $37 billion, forming Broadcom Ltd., while Intel Corp.
purchased Altera Corp. for $16.7 billion.
Cavium completed the purchase of Xpliant Inc. in early 2015.
Write to Josh Beckerman at josh.beckerman@wsj.com
(END) Dow Jones Newswires
June 15, 2016 23:25 ET (03:25 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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