US-based chip major Cavium is set to acquire QLogic, a supplier of networking infrastructure solutions, in a deal valued at approximately $1.36 billion.
The deal value includes $355 million cash on QLogic’s balance sheet.
The strategy of Cavium is to add QLogic’s connectivity and storage solutions, which are complementary to Cavium’s networking, compute, and security solutions. Cavium aims to offer a complete offering to customers in enterprise, Cloud, data center, storage, telecoms and networking markets with the acquisition of QLogic.
The acquisition of QLogic adds an incremental $2 billion plus market opportunity for Cavium.
Cavium said the revenue of the combined chip company will be nearly $900 million. The other main benefits will be strong profitability and cash flow generation. $45 million will be annualized cost synergies across COGS and operating expenses to be realized by the end of 2017, said Cavium.
“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.
