Avago Technologies acquiring Emulex for $606 million

FORT COLLINS – Avago Technologies Ltd. saw its share price surge nearly 6 percent in after-hours trading Wednesday following its quarterly earnings report and news that the company has reached a deal to acquire Emulex Corp.

Avago (Nasdaq: AVGO) – a Singapore and San Jose, Calif.-based company that employs about 1,200 people in Fort Collins – announced that it will pay about $606 million, or $8 per outstanding share of common stock for Costa Mesa, Calif.-based Emulex (NYSE: ELX). The boards of both companies have approved the deal, which is expected to close in the second half of Avago’s fiscal year, which ends Nov. 1.

Avago shares, which have nearly tripled in price over the past year, closed at $112.68 Wednesday but had risen to $119.20 within an hour of markets closing and the company releasing its announcements. Emulex shares, meanwhile, rose 25 percent to $7.94 in after-hours trading after closing Wednesday at $6.36.

SPONSORED CONTENT

How dispatchable resources enable the clean energy transition

Platte River must prepare for the retirement of 431 megawatts (MW) of dispatchable, coal-fired generation by the end of the decade and address more frequent extreme weather events that can bring dark calms (periods when there is no sun or wind).

Avago is funding the deal with cash on hand.

Avago makes semiconductor devices for a wide variety of electronics. Emulex, which has offices spread throughout the world in addition to its California headquarters, offers connectivity services for data centers. Emulex will operate as a business unit within Avago’s enterprise storage segment, Avago officials said.

“Emulex’s connectivity business fits very well with Avago’s existing portfolio serving the enterprise storage end market,” Hock Tan, president and CEO of Avago, said in a statement.

The deal came as Avago announced first-quarter fiscal earnings of $351 million, or $1.26 per diluted share, for the period ending Feb. 1. That was up from $135 million the previous quarter and from $134 million for the same period a year ago.

Revenue climbed to $1.6 billion in the first quarter, more than double that of a year earlier due in part to the acquisitions of LSI Corp. and PLX Technology Inc. Avago finished the quarter with a cash balance of $2.6 billion, up $1 billion from the previous quarter.

Avago last weekend held a job fair in Fort Collins to showcase 100 new manufacturing and operations jobs that it expects to fill over the course of this year.

“We had a strong start to our fiscal year with better than expected 3 percent sequential revenue growth in the first quarter, driven by our wireless revenues, which grew by 90 percent from the same quarter last year,” Tan said.

Emulex, whose fiscal year ends in June, recorded revenue of $111 million for the three months ending Dec. 28, with net income of $4.3 million, or 6 cents per share.