Avago Technologies to Acquire LSI Corporation for $6.6 Billion in Cash

Silver Lake Partners to Support Transaction With $1 Billion Investment in Avago

• Positions Avago as a leader in enterprise storage
• Expands market position and brings valuable system-level expertise in wired infrastructure
• Diversifies revenue and scales up Avago across multiple attractive end markets
• Significantly and immediately accretive to Avago free cash flow and EPS on a non-GAAP basis
• $200 million of annual operating synergies expected by the end of fiscal year 2015

SAN JOSE, Calif. and SINGAPORE, Dec. 16, 2013 (GLOBE NEWSWIRE) — Avago Technologies Limited (AVGO) and LSI Corporation (LSI) today announced that they have entered into a definitive agreement under which Avago will acquire LSI for $11.15 per share in an all-cash transaction valued at $6.6 billion. The acquisition creates a highly diversified semiconductor market leader with approximately $5 billion in annual revenues by adding enterprise storage to Avago’s existing wired infrastructure, wireless and industrial businesses. The combined company will be strongly positioned to capitalize on the growing opportunities created by the rapid increases in data center IP and mobile data traffic.

“This highly complementary and compelling acquisition positions Avago as a leader in the enterprise storage market and expands our offerings and capabilities in wired infrastructure, particularly system-level expertise,” stated Hock Tan, President and Chief Executive Officer of Avago. “This combination will increase the Company’s scale and diversify our revenue and customer base. In addition to these powerful strategic benefits, as we integrate LSI onto the Avago platform, we expect to drive LSI’s operating margins toward Avago’s current levels, creating significant additional value for stockholders.”

“This transaction provides immediate value to our stockholders, and offers new growth opportunities for our employees to develop a wider range of leading-edge solutions for customers,” said Abhi Talwalkar, President and Chief Executive Officer of LSI. “Our leadership positions in enterprise storage and networking, in combination with Avago, create greater scale to further drive innovations into the datacenter.”

The transaction is expected to be significantly and immediately accretive to Avago’s non-GAAP free cash flow and earnings per share. Avago currently anticipates achieving annual cost savings at a run rate of $200 million by the end of the fiscal year ending November 1, 2015, the first full fiscal year after closing.

Under the terms of the agreement, LSI’s stockholders will receive $11.15 in cash for each share of LSI common stock they hold at closing, which is expected to occur during the first half of calendar 2014. Avago intends to fund the transaction with $1.0 billion of cash from the combined balance sheet and fully-committed financing from the following sources:

• A $4.6 billion term loan from a group of banks; and
• A $1 billion investment from Silver Lake Partners, which is expected to be in the form of a seven year 2% convertible note with a conversion price of $48.04 per share or preferred stock with equivalent economic terms.

The transaction has been approved by the boards of directors of both companies and is subject to regulatory approvals in various jurisdictions and customary closing conditions, as well as the approval of LSI’s stockholders.

About Avago Technologies Limited

Avago Technologies Limited is a leading designer, developer and global supplier of a broad range of analog semiconductor devices with a focus on III-V based products. Our product portfolio is extensive and includes thousands of products in three primary target markets: wireless communications, wired infrastructure and industrial & other.

About LSI

LSI Corporation (LSI) designs semiconductors and software that accelerate storage and networking in datacenters, mobile networks and client computing. Our technology is the intelligence critical to enhanced application performance, and is applied in solutions created in collaboration with our partners. More information is available at www.lsi.com.

About Silver Lake

Silver Lake is a global leader in private investments in technology and technology-enabled industries. Silver Lake invests with the strategic and operational insights of an experienced industry participant. The firm has approximately 110 investment and value creation professionals located in New York, Menlo Park, San Mateo, London, Hong Kong, Shanghai and Tokyo and manages approximately $20 billion in combined assets under management. The Silver Lake Partners portfolio includes or has included technology and technology-enabled industry leaders such as Alibaba, Allyes, Ameritrade, Avago, Avaya, Business Objects, Dell, Flextronics, Gartner, Gerson Lehrman Group, Global Blue, Instinet, Intelsat, Interactive Data Corporation, IPC Systems, MCI, Mercury Payment Systems, MultiPlan, the NASDAQ OMX Group, NetScout, NXP, Sabre, Seagate Technology, Serena Software, Skype, Smart Worldwide Holdings, Spreadtrum, SunGard Data Systems, UGS, Vantage Data Centers and William Morris Endeavor. For more information about Silver Lake and its entire portfolio, please visit www.silverlake.com.