By Lauren Pollock
Singapore-based chip maker Avago Technologies Ltd. agreed to
acquire networking company Emulex Corp. for about $606 million, an
acquisition it said would fit well with its enterprise storage
portfolio.
Emulex investors will receive $8 a share in cash, a 26% premium
to Wednesday's close. Shares surged to $7.92 after hours and last
traded above the offer price in fall 2013.
Avago shares rose nearly 6% as the company also reported
earnings for the most recent quarter that beat Wall Street
estimates.
Emulex makes network connectivity, monitoring and management
software and hardware. It found itself in 2013 in the cross hairs
of activist investor Starboard Value LP, which expressed
disappointment in its financial results and called for action to
lift the company's lagging stock.
Emulex later slashed its workforce, disclosed a series of
cost-cutting plans and closed an engineering facility. Starboard is
no longer a major shareholder.
Its quarterly results last month were less weak than the
networking company projected in October.
For its part, Avago was founded in 2005 from a $2.66 billion
buyout of semiconductor operations from Agilent Technologies Inc.,
which were originally part of Hewlett-Packard Co. Silver Lake and
KKR Co. led that transaction.
Though based in Singapore, Avago has substantial operations in
Silicon Valley. Leaning on H-P research that started in the 1960s,
the company built businesses in optical components as well as
analog chips made using materials such as gallium arsenide. Avago's
products based on that material are widely used for radio
components in smartphones.
Avago, which makes chips for products ranging from cellphones to
computer servers, said the deal is expected to immediately add to
its earnings.
Avago bulked up last year with its acquisition of semiconductor
company LSI Corp., which specializes in chips used in networking
and data-storage hardware that use disk drives or flash memory
chips.
For the quarter ended Feb. 1, the company posted earnings of
$351 million, up sharply from $134 million a year earlier, helped
by higher revenue.
Write to Lauren Pollock at lauren.pollock@wsj.com
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