The two companies sell into a number of markets -- enterprise, cloud, data center, storage, telco and networking -- but Cavium emphasized that the deal is aimed at marrying two complementary product lines with the expectation that a more comprehensive portfolio will lead to increased sales in the data center market.
Cavium specializes in silicon for networking, compute and security. QLogic, meanwhile has a portfolio of connectivity and storage solutions. As of last year, QLogic server and storage system OEM customers included Cisco Systems, Dell, EMC, Fujitsu Ltd., Hewlett-Packard, Huawei Technologies., IBM, Oracle and others. (See Cavium Debuts SoC for Data Center Servers.)
The two companies have been technology partners. A year ago, the two announced the integration of QLogic network interface cards (NICs) with Cavium's Thunder X processors to create a solution designed to accelerate various applications, including Hadoop and Ceph, in the data center.
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"Today's acquisition of QLogic is highly complementary and strategic to Cavium and it creates a diversified pure-play infrastructure semiconductor leader," said Syed Ali, president and chief executive officer of Cavium. "QLogic's industry leading products extend our market position in data center, cloud and storage."
Ali invoked synergies in manufacturing, sales and operations, suggesting the combined workforce will eventually be trimmed.
Cavium is laying out a total of $15.50 a share, $11 of that in cash, with the balance to be paid in Cavium stock (0.098 of a share of Cavium common stock for each share of QLogic common stock).
Cavium said it has $220 million in cash, $750 million of committed financing ($650 million of term loan and $100 million of short-term bridge debt) and $400 million in new Cavium equity. Roughly a quarter of the total purchase price -- $355 million -- is actually cash currently on QLogic's balance sheet.
Cavium said QLogic will add an incremental $2 billion (or better) market opportunity.
The deal is expected to close in the third quarter.
— Brian Santo, Senior Editor, Components, T&M, Light Reading