Leading analog semiconductor manufacturer
Avago Technologies Limited
) recently inked a definitive agreement to acquire
PLX Technology Inc.
) for approximately $309 million in cash. The strategic move is
aimed to complement Avago's existing server storage connectivity
and networking ASIC (application-specific integrated circuit)
products that serve the enterprise and data center market. This, in
turn, is expected to augment Avago's revenues, as the industry
braces for more consolidation amid a challenging macroeconomic
Based in Sunnyvale, CA, PLX is a premier manufacturer of
semiconductor-based PCI Express (PCIe) connectivity solutions that
provide more bandwidth and is compatible with other existing
operating systems. Based on the PCIe Gen3 standard, PLX's
ExpressFabric offers a wide range of new enterprise storage and
other key data center applications. It creates a universal
interconnect that significantly improves the existing architecture
and builds a powerful, cost-efficient PCIe interconnect that
enables I/O-sharing applications.
The core PLX business is deemed to be a strategic fit for Avago,
further adding a new dimension to next generation data center
architectures. In addition to cost synergies from a combined
resource pool as the cost of designing and building semiconductors
rises, the acquisition is likely to improve the operating margin of
the combined company, creating greater scale to further drive
innovation into the datacenter. The acquisition is expected to be
immediately accretive to Avago's non-GAAP earnings and is likely to
close in the fourth quarter of the current fiscal ending Nov 3,
2014, subject to the fulfillment of all the mandatory closing
The all-cash transaction will be funded by Avago's available cash
in hand. The purchase price equates to a cash payment of $6.50 for
each PLX share, representing the at-par closing price of the day
the deal was announced.
With an expertise in compound semiconductor design and processing,
Avago is a leading designer, developer and global supplier of a
broad range of analog, mixed signal and optoelectronics components
and subsystems. The company boasts over 4,200 patents serving 3
primary target market segments: wireless communications, wired
infrastructure, and industrial and other.
Avago presently has a Zacks Rank #1 (Strong Buy). Other stocks that
are worth considering in the industry include
Advanced Semiconductor Engineering Inc.
Alpha & Omega Semiconductor, Ltd.
), both carrying a Zacks Rank #2 (Buy).
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AVAGO TECHNOLOG (AVGO): Free Stock Analysis
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