More: LSI Logic to Acquire SEEQ for $100 Million in Stock (Update2)
(Adds purchase is LSI's third since 1977 in second paragraph,
background in third paragraph. Updates share prices.)
Milpitas, California, Feb. 22 (Bloomberg) -- LSI Logic Corp., a maker
of specialty semiconductors, agreed to buy network chip designer SEEQ
Technology Inc. for about $100 million in stock to take advantage of
rising use of the Internet.
LSI said it will exchange 0.1095 share for each SEEQ share, or 47
percent more than Friday's close. The purchase, LSI's third
since 1997, is expected to add to earnings after it is completed
in the second quarter ending June 30.
Milpitas, California-based LSI is broadening its line of chips for
Internet communications as networking-equipment makers demand
faster products for their gear. Networking chip sales are expected
to rise twice as fast as sales of microprocessors during the next
three years. ''SEEQ has good technology for high-speed networking
and this will only help LSI in that market,'' said Mark Edelstone,
a Morgan Stanley Dean Witter analyst in San Francisco, who rates
LSI an ''out perform.''
Expanding Internet use is boosting sales of LSI's semiconductors to
telecommunications and networking companies such as Cisco Systems Inc.
and Cabletron Systems Inc. Acquiring SEEQ, which had 1998 revenue
of $28.1 million, will allow LSI to broaden its line of Internet-driven
networking products, Chairman and Chief Executive Wilfred Corrigan
said in a statement.
LSI, which had 1998 sales of $1.49 billion, said the ratio of its
shares for SEEQ shares may be adjusted. SEEQ has 37.3 million shares
outstanding, and LSI said it will issue new shares for the acquisition.
Fremont, California-based SEEQ has 72 employees, said LSI spokesman
Kevin Brett. He said there will be no charges connected with the
acquisition, and he declined to comment about any possible job cuts.
Since SEEQ does not make its own chips, eventually it will transfer
its chip making requirements to LSI's new plant in the Portland,
Oregon, suburb of Gresham, Brett said.
Chipmakers such as LSI, which also makes chips for Sony Corp.'s
PlayStation video-game system, struggled last year with a worldwide
slowdown in demand that led to falling prices and lower profits.
Previous LSI acquisitions include Mint Technology Inc. in 1997 and last
year's $760 million purchase of Symbios Inc.
LSI shares rose 1 1/8 to 28 3/8 midafternoon trading. SEEQ rose 1/2 to
2 17/32 in trading of 1.7 million shares, more than five times the
three-month average.
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