LSI to Sell External Storage Systems Business to NetApp for $480 Million
News Release from:
LSI Europe Ltd
17 March 2011
LSI Corporation today announced that it has signed a definitive agreement to sell its external storage systems business to NetApp, Inc. (NASDAQ: NTAP) for $480 million in cash. The company also announced today that its board of directors has authorized a new stock repurchase program of up to $750 million.
The company is emerging from a multi-year investment cycle which has significantly increased the opportunities and potential of its core semiconductor business. The strategic decision to divest the external storage systems business was based on the company’s expectation that long-term shareholder value can be maximized by becoming a pure-play semiconductor company.
We’re excited by the opportunities we have been pursuing in our semiconductor business and are well positioned at the forefront of a strong pipeline of design win ramps that we expect to drive top line growth, said Abhi Talwalkar, LSI president and chief executive officer. Going forward as a pure-play storage and networking semiconductor company, we believe we can accelerate the achievement of our current business model, establish a richer business model target, and deliver greater long-term shareholder value.
Under terms of the agreement, NetApp will purchase substantially all the assets of the LSI external storage systems business, which develops and delivers Engenio® external storage systems products and technology to a wide range of partners that provide storage solutions to end customers. The business being purchased generated revenues of $705 million in 2010.
The LSI RAID adapter business, which develops LSI® MegaRAID® and 3ware® storage controllers and software for direct-attached storage environments, will remain with LSI.
Upon closing, most LSI external storage systems employees are expected to join NetApp, a global provider of storage and data management solutions.
NetApp will build upon the success of the Engenio storage platform and OEM business model to expand our total addressable market and extend our market reach, said Tom Georgens, NetApp president and CEO. We’re excited about the talented team that will join NetApp and the valuable OEM partner relationships we’re committed to supporting and making successful.
Talwalkar added, As the market requirements for external storage systems continue to trend toward more comprehensive solutions and offerings, greater investment levels are required to enable additional growth opportunities. We believe that NetApp is well positioned to provide the needed technologies and scale to grow the external storage systems business and better serve our customers going forward.