PCI Express Expert PLX Acquired By Avago
Analog chip developer Avago Technologies continued its foray into the storage market and possible the server market with the acquisition of PLX Technology in a cash deal valued at about $309 million.
Singapore-based Avago, which has offices in Silicon Valley, also specializes in analog devices used for enterprise storage. It said PLX's PCI Express products would complement its server-storage connectivity and networking ASIC products used in datacenters. PLX PCI Express chips and connectivity software are targeted at the enterprise datacenter market.
Avago said the all-cash transaction includes $293 million in net cash along with acquired debt. Under terms of the deal, an Avago subsidiary would tender an offer to acquire all outstanding shares of PLX common stock valued at $6.50 per share.
The offer price represents a 9.4 percent premium for current shareholders based on PLX's closing price on June 20.
Avago said it expects to fund the transaction with cash currently available on its balance sheet. The acquisition, which is subject to U.S. and foreign antitrust review, is expected to close in the fourth quarter of Avago's fiscal year ending on November 3, 2014.
"The core PLX PCIe silicon business fits very well with the Avago business model and broadens Avago's portfolio serving the enterprise storage and networking end markets," Avago CEO Hock Tan said in a statement announcing the deal.
Details of how PLX will be merged into Avago's operations were not disclosed, but Tan said Avago would continue to invest in the PLX PCI Express platform.
Potomac Capital Partners II is the largest stockholder in PLX. The venture capital firm along with senior PLX managers and directors collectively control about 14.7 percent of the company's shares. Discovery Group I is the second largest PLX shareholder. Avago said Discovery has signed an agreement supporting the deal.
Avago has been on a storage acquisition spree. In April, it completed the purchase of Silicon Valley mainstay LSI Logic for about $6.6 billion in cash. That deal moved Avago squarely into the network and storage chip business as it seeks to become a larger player in the mainstream cloud and mobile software markets.
Avago was once part of Agilent, the former semiconductor unit of Hewlett-Packard.
Last October, PLX joined the OpenFabrics Alliance that focuses on delivering optimum network bandwidth and reducing latency for Linux and Microsoft Windows Server operating systems. At the time, PLX said it was developing compliant PCI Express technologies incorporating Remote Direct Memory Access and other functionality to enable PCI Express to act as a "fabric within datacenter racks."
As EnterpriseTech has previously reported, PLX and another company called A3Cube have been developing two different extensions of PCI Express point-to-point interconnect. The approaches would allow PCI Express to act like a low-latency switch between servers, positioning it as an alternative to Ethernet and InfiniBand.