) is facing an investigation by Levi & Korsinsky, a national
law firm, related to the breach of fiduciary duty and violation
of state rules and regulations in the deal with
Avago Technologies Limited
), a leading analog semiconductor manufacturer.
Avago Technologies had entered into a definitive
agreement to acquire LSI for $6.6 billion in cash. LSI
shareholders will receive a cash payment of $11.15 for each LSI
The transaction is expected to be completed within the first
half of 2014, subject to regulatory approvals and fulfillment of
customary closing conditions.
The strategic move was aimed to diversify Avago's existing
business line from wired infrastructure, wireless and industrial
businesses to the storage chip market to boost revenues in the
face of industry consolidation and challenging macroeconomic
With the announcement of the deal, LSI shares jumped 38.6% to
close at $10.96 on Dec 16. Even Avago shares, which were up 42.7%
so far this year till Friday, were up 9.8% . The ensuing
investigation is aimed at determining whether the LSI board has
sufficiently discharged its duties related to the sale and to
verify whether or not Avago Technologies has adequately paid for
LSI has a broad range of products that enables it to serve a
diverse clientele in the hard disk drive (HDD), server and
networking end markets. We believe that LSI's focus on
flash-based technology will be beneficial for the company, going
Additionally, LSI's associations with
Cisco Systems, Inc.
) in the networking space should positively impact the company.
Moreover, continuous share buybacks and dividend payouts are
expected to boost investor confidence.
However, sluggish macroeconomic conditions and competition
from its peers are the near-term headwinds. Moreover, the
company's conservative guidance could also be an overhang in the
Currently, LSI Corp carries a Zacks Rank #3 (Hold). A better
ranked stock in the technology sector is
Micron Technology Inc.
), with a Zacks Rank #1 (Strong Buy).
AVAGO TECHNOLOG (AVGO): Free Stock Analysis
CISCO SYSTEMS (CSCO): Free Stock Analysis
LSI CORP (LSI): Free Stock Analysis Report
MICRON TECH (MU): Free Stock Analysis Report
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