Avago announced it's buying PLX in a deal worth approximately $309 million. PLX develops PCI Express and Ethernet solutions, the company is perhaps best known among enthusiasts for its bridge chips that are adopted by some higher-end motherboards to increase the PCI Express lane count.
Avago Technologies Limited and PLX Technology, Inc. today announced that they have entered into a definitive agreement under which Avago will acquire PLX, a leader in PCI Express silicon and software connectivity solutions, in an all-cash transaction valued at approximately $309 million, or $293 million net of cash and debt acquired.
Under the terms of the agreement, which was approved by the Boards of Directors of both companies, a subsidiary of Avago will commence a tender offer for all of the outstanding shares of PLX common stock for $6.50 per share in cash. Avago expects to fund the transaction with cash available on its balance sheet.
"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," stated Hock Tan, President and Chief Executive Officer of Avago. "Following the closing of the transaction, we are excited to welcome the PLX team to Avago, and we are committed to continue to invest in the PLX PCI Express platform."
"Once closed, this transaction will provide immediate value to our stockholders and offers new growth opportunities for our employees to develop leading-edge solutions for our customers," said David Raun, President and Chief Executive Officer of PLX. "Following the closing of the transaction, we believe the combination with Avago is an excellent match for our leading PCI Express portfolio supporting next generation data center architectures."
The transaction is expected to be immediately accretive to Avago's non-GAAP earnings per share. Avago currently anticipates driving the PLX business model to a level consistent with Avago's long term business model by the end of fiscal year 2015, the first full fiscal year after closing.
Potomac Capital Partners II, L.P., which is the largest stockholder of PLX, certain senior members of the PLX management team and all of the directors of PLX, collectively owning approximately 14.7% of shares outstanding on fully diluted basis have executed a Tender and Support Agreement in support of the transaction. Discovery Group I, LLC, the second largest stockholder of PLX, has informed PLX that it supports the transaction.
The transaction is subject to customary closing conditions, including the tender into the offer by PLX stockholders of shares representing at least a majority of the outstanding shares of PLX common stock on a fully diluted basis, and the receipt of relevant regulatory approvals, including the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act and relevant foreign antitrust laws. It is expected that the transaction will close in the fourth quarter of Avago's fiscal year ending November 3, 2014.