Cavium, Inc. and QLogic have entered into a definitive agreement for Cavium to acquire all of the outstanding QLogic common stock for approximately $15.50 per share, comprised of $11.00 per share in cash and 0.098 of a share of Cavium common stock for each share of QLogic common stock (valued at approximately $4.50 based on the volume weighted average Cavium trading price for the three trading days beginning June 10, 2016), through an exchange offer. The transaction values QLogic at approximately $1.36 billion in equity value, inclusive of approximately $355 million of cash on QLogic’s balance sheet, and has been unanimously approved by the boards of directors of both companies.
The acquisition provides:
- Opportunity to drive significant growth at scale in data center and storage markets: QLogic's leading portfolio of advanced connectivity and storage solutions is highly complementary to Cavium’s extensive portfolio of networking, compute, and security solutions. The combination enables Cavium to offer a complete end-to-end offering to customers in Enterprise, Cloud, Data Center, Storage, Telco and Networking markets. QLogic adds an incremental $2+ billion market opportunity for Cavium.
- Substantial customer and revenue diversification: The combined customer base includes market leading OEMs and end-customers across a broad set of end markets that diversifies Cavium’s revenue and presents a unique opportunity to accelerate further growth.
- $0.60 to $0.70 of accretion to Cavium’s CY 2017 non-GAAP EPS: The combined company will have nearly $900 million in LTM revenue, with strong profitability and cash flow generation. There are $45 million of identified annualized cost synergies across COGS and operating expenses expected to be realized by the end of 2017. The transaction is expected to create significant value for the shareholders of both companies.
“Today’s acquisition of QLogic is highly complementary and strategic to Cavium and it creates a diversified pure-play infrastructure semiconductor leader,” stated Syed Ali, President and Chief Executive Officer of Cavium. “QLogic’s industry leading products extend our market position in data center, cloud and storage markets, and further diversifies our revenue and customer base. In addition to the compelling strategic benefits, the manufacturing, sales and operating synergies will create significant value for our shareholders.”
“QLogic with Cavium is a winning combination for customers and employees and is financially compelling for QLogic shareholders,” said Christine King, Executive Chairman of QLogic. “The scale of operations of a nearly $1 billion revenue business will allow the combined company to deliver better solutions for customers and create more career opportunities for employees. Shareholders will benefit from both the immediate premium, as well as the opportunity to participate in the long-term value creation from the combined company’s strong growth prospects.”
