Creates Storage, Networking and Consumer Powerhouse
Transaction Expected to Result in Significant Annual Operating Synergies
LSI Announces $500 Million Stock Repurchase Program
MILPITAS, Calif., and ALLENTOWN, Pa., Dec. 4 /PRNewswire-FirstCall/ -- LSI
Logic Corporation (NYSE: LSI) and Agere Systems Inc. (NYSE: AGR) today
announced that they have entered into a definitive merger agreement under
which the companies will be combined in an all-stock transaction with an
equity value of approximately $4.0 billion. Under the terms of the agreement,
Agere shareholders will receive 2.16 shares of LSI for each share of Agere
they own. Based on the closing stock price of LSI on December 1, 2006, this
represents a value to Agere shareholders of $22.81 per share.
The combined company, to be called LSI Logic Corporation, will offer a
comprehensive set of building block solutions including semiconductors,
systems and related software for storage, networking and consumer electronics
products. The companies had combined revenue of $3.5 billion for the 12 months
ended September 30, 2006. The companies operate in more than 20 countries,
with a combined workforce of approximately 9,100 employees, including nearly
4,300 engineers. The companies together own a substantial patent portfolio
consisting of more than 10,000 issued and pending U.S. patents.
Going forward, the new LSI expects to be well positioned to deliver
significant benefits to its customers, shareholders and employees. By
leveraging its increased scale, expanded IP portfolio and integrated
workforce, LSI anticipates being a stronger, more competitive innovator of
core technology and building block solutions that enable businesses and
consumers to store, protect and stay connected to their information and
"LSI and Agere share a rich heritage of innovation and thought leadership
in creating enabling technologies that bring people and information together,"
said Abhi Talwalkar, LSI Logic president and chief executive officer. "By
joining forces, we expect the combined scale to enable us to extend our
franchises in our market segments, realize significant synergies and better
serve the needs of our collective customers, shareholders and employees."
"Together, the two companies should be well positioned to achieve greater
success," said Richard Clemmer, Agere Systems president and chief executive
officer. "The complementary products and capabilities of each can enable the
combined company to pursue significant new opportunities while delivering more
value to customers. Agere shareholders, employees and customers will benefit
from the synergies and enhanced growth prospects that are anticipated to
result from a larger, more competitive organization."
The combination of LSI and Agere is anticipated to create a semiconductor
and storage systems powerhouse with an unparalleled innovation pipeline and a
broad array of competitive, customer-valued products and solutions in large
and growing markets. LSI's well-established presence in the storage and
consumer electronics markets and Agere's broad footprint in storage, mobility
and networking should enable the combined company to drive sustainable long-
term growth and shareholder value through the strengthening of its combined
platforms and the expansion of its existing customer relationships.
"As valued Seagate partners, both Agere and LSI play an important role in
providing products that help us deliver our industry-leading hard disc
drives," said Bill Watkins, Seagate Technology chief executive officer. "We
are excited by the innovative possibilities that this new combination
About the Transaction
Under the terms of the agreement, Agere shareholders will receive 2.16
shares of LSI common stock for each share of Agere stock they own. Based on
the closing stock price of LSI on December 1, 2006, the total consideration to
Agere shareholders would be approximately $4.0 billion or $22.81 per share.
Upon closing, LSI will issue approximately 379 million shares on a diluted
basis to complete the transaction. At that time, LSI and Agere shareholders
will own approximately 52% and 48%, respectively, of the combined company.
The combined company also expects to realize substantial cost savings
beginning in 2007, with annual cost savings reaching at least $125 million in
2008 from increased efficiencies in manufacturing and operating expenses. The
transaction is expected to be slightly dilutive in 2007 and meaningfully
accretive in 2008 to LSI's earnings per share, on a non-GAAP basis.
LSI president and chief executive officer Abhi Talwalkar will serve as
president and chief executive officer of the new company, which will be
headquartered in Milpitas, California, and will maintain a significant
presence in Allentown, Pennsylvania with various other locations worldwide.
LSI non-executive chairman James Keyes will continue as non-executive chairman
of the board of directors of the new company, which will be comprised of nine
members, with six being designated by LSI and three being designated by Agere.
The transaction is subject to the approval of shareholders from both
companies as well as customary closing conditions and regulatory approvals.
The companies expect the transaction to close in the first calendar quarter of
Shares of the combined company will trade on the NYSE under the symbol
Morgan Stanley acted as financial advisor and Wilson Sonsini Goodrich &
Rosati acted as legal counsel to LSI. Goldman, Sachs & Co. acted as financial
advisor and Skadden, Arps, Slate, Meagher & Flom acted as legal counsel to
LSI Stock Repurchase Program
LSI also announced today that its board of directors has authorized a
stock repurchase program of up to $500 million. The repurchases are expected
to be funded from available cash and short-term investments.
Conference Call and Webcast Information
The companies will hold a joint conference call and webcast today at
8 a.m. EST to discuss this announcement.
The conference call can be monitored by dialing 1-866-202-1971 within the
U.S. and 1-617-213-8842 for all other locations, passcode 61605753.
The webcast can be accessed at http://www.lsi.com/investors and
A telephonic replay of the December 4 conference call will be available
the same day beginning at approximately 10:00 a.m. EST and can be accessed
through December 8. The replay access numbers are 1-888-286-8010 within the
U.S. and 1-617-801-6888 for all other locations, passcode 15043040. The
webcast will be archived at http://www.lsi.com/investors and
LSI will also be participating in the upcoming Lehman Brothers Global
Technology Conference in San Francisco, California on December 7, 2006.
About LSI Logic
LSI Logic Corporation (NYSE: LSI) is a leading provider of silicon-to-
system solutions that are used at the core of products that create, store and
consume digital information. LSI offers a broad portfolio of capabilities
including custom and standard product ICs, host bus and RAID adapters, storage
area network solutions and software applications. LSI products enable leading
technology companies in the Storage and Consumer markets to deliver some of
the most advanced and well-known electronic systems in the market today. More
information is available at www.lsi.com.
About Agere Systems
Agere Systems is a global leader in semiconductors and software solutions
for storage, mobility, and networking markets. The company's products enable a
broad range of services and capabilities, from cell phones, PCs, and hard disk
drives to the world's most sophisticated wireless and wireline networks.
Agere's customers include manufacturers of consumer electronics and
communications and computing equipment. Agere works to transform the
performance of networks and consumer electronics by integrating systems
knowledge and leading technology that enable people to stay connected -
perfecting the connected lifestyle. More information is available at
About Non-GAAP Financial Measures
Non-GAAP financial measures exclude gain or loss from the sale of, and
income or loss from, discontinued operations; restructuring-related charges
included in costs; primarily increased depreciation; certain other non-cash
charges including equity compensation; net restructuring and other charges;
purchased in-process research and development charges, amortization of
acquired intangible assets, net gain or loss from the sale of operating
assets, certain tax adjustments, cumulative effect of accounting changes, and
certain nonrecurring charges.
Additional Information and Where You Can Find It
This communication may be deemed to be solicitation material in respect of
the proposed transaction between Agere and LSI. In connection with the
transaction, LSI will file a registration statement on Form S-4 with the SEC
containing a joint proxy statement/prospectus. The joint proxy
statement/prospectus will be mailed to the shareholders of LSI and Agere.
Investors and security holders of LSI and Agere are urged to read the joint
proxy statement/prospectus when it becomes available because it will contain
important information about LSI, Agere and the proposed transaction. The joint
proxy statement/prospectus (when it becomes available), and any other
documents filed by LSI or Agere with the SEC, may be obtained free of charge
at the SEC's web site at www.sec.gov. In addition, investors and security
holders may obtain free copies of the documents filed with the SEC by LSI and
Agere by contacting, respectively, LSI Investor Relations by e-mail at
firstname.lastname@example.org or by telephone at 1-800-433-8778 or by contacting
Agere Investor Relations by e-mail at email@example.com or by telephone at 1-
800-372-2447. Investors and security holders are urged to read the joint proxy
statement/prospectus and the other relevant materials when they become
available before making any voting or investment decision with respect to the
LSI, Agere and their respective directors and executive officers may be
deemed to be participants in the solicitation of proxies from their
shareholders in favor of the proposed transaction. Information about the
directors and executive officers of LSI and Agere and their respective
interests in the proposed transaction will be available in the joint proxy
Cautionary Statement Regarding Forward-Looking Statements
This document contains forward-looking statements within the meaning of
the "safe harbor" provisions of the Private Securities Litigation Reform Act
of 1995. These statements are based on management's current expectations and
beliefs and are subject to a number of factors and uncertainties that could
cause actual results to differ materially from those described in the forward-
looking statements. The forward-looking statements contained in this document
include statements about future financial and operating results; benefits of
the transaction to customers, shareholders and employees; potential synergies
and cost savings resulting from the transaction; the ability of the combined
company to drive growth and expand customer and partner relationships and
other statements regarding the proposed transaction. These statements are not
guarantees of future performance, involve certain risks, uncertainties and
assumptions that are difficult to predict, and are based upon assumptions as
to future events that may not prove accurate. Therefore, actual outcomes and
results may differ materially from what is expressed herein. For example, if
LSI and Agere do not each receive required shareholder approval or the parties
fail to satisfy other conditions to closing, the transaction will not be
consummated. In any forward-looking statement in which LSI or Agere expresses
an expectation or belief as to future results, such expectation or belief is
expressed in good faith and believed to have a reasonable basis, but there can
be no assurance that the statement or expectation or belief will result or be
achieved or accomplished. The following factors, among others, could cause
actual results to differ materially from those described in the forward-
looking statements: failure of the LSI and Agere shareholders to approve the
proposed merger; the challenges and costs of closing, integrating,
restructuring and achieving anticipated synergies; the ability to retain key
employees; and other economic, business, competitive, and/or regulatory
factors affecting the businesses of LSI and Agere generally, including those
set forth in the filings of LSI and Agere with the Securities and Exchange
Commission, especially in the "Risk Factors" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" sections of their
respective annual reports on Form 10-K and quarterly reports on Form 10-Q,
their current reports on Form 8-K and other SEC filings. LSI and Agere are
under no obligation to (and expressly disclaim any such obligation to) update
or alter their forward-looking statements whether as a result of new
information, future events, or otherwise.
1. All LSI Logic news releases (financial, acquisitions, manufacturing,
products, technology etc.) are issued exclusively by PR Newswire and
are immediately thereafter posted on the company's external website,
2. The LSI Logic logo design is a registered trademark of LSI Logic
3. Agere, Agere Systems and the Agere Systems logo are registered
trademarks of Agere Systems Inc.
4. All other brand or product names may be trademarks or registered
trademarks of their respective companies.
Media Relations Contacts: Investor Relations Contacts:
Mitch Seigle Tom Tran
Robert Guenther Sujal Shah
SOURCE LSI Logic Corporation; Agere Systems Inc.
/CONTACT: Media Relations: Mitch Seigle of LSI Logic Corporation,
+1-408-954-3225, firstname.lastname@example.org; or Robert Guenther of Agere Systems
Inc., +1-610-712-1514, email@example.com; Investor Relations: Tom Tran of
LSI Logic Corporation, +1-408-433-8105, firstname.lastname@example.org; or Sujal Shah of
Agere Systems Inc., +1-610-712-5471, email@example.com/
/Web site: http://www.lsi.com
CO: LSI Logic Corporation; Agere Systems Inc.
ST: California, Pennsylvania
IN: CPR STW
SU: TNM CCA
-- NYM174 --
9078 12/04/2006 05:00 EST http://www.prnewswire.com