LSI Logic said today it agreed to pay US$760 million to buy Huyndai Electronics America's Symbios unit, just four days after Adaptec withdrew its offer for Symbios because of antitrust opposition. The deal was reached Sunday night in a Silicon Valley law office.
Symbios specializes in electronics that shuffle data at high speed from a computer's memory and storage devices to its central processing unit. Its expertise is becoming increasingly important in designing high-speed computers.
The acquisition, to be paid for in cash and the assumption of Symbios debt, would give LSI (LSI) a command in high-speed interface protocols, such as Fibre Channel and Small Computer System Interface (SCSI). LSI also would diversify from its main business of designing custom computer chips for consumer electronics, and computer and telecommunication companies.
"It makes sense for LSI," said Ashok Kumar, chip analyst at investment bank Piper Jaffray. "They’re trying to diversify since most of their revenue comes from networking, and their consumer stream is wedded to Sony."
Adaptec (ADPT), another big maker of interface electronics, tried to buy Symbios in February for $774 million. The company scrapped the deal last week, however, when it appeared that the Federal Trade Commission would oppose it because of Adaptec's resulting market power.
LSI said it would have to go through the same regulatory process, but was confident that it could pull the deal off.
"We’re very hopeful we will be approved," said Kevin Brett, LSI spokesman. "There’s very little product overlap."
Analysts said it's also likely that Adaptec backed out of the deal because of the price, given the collapse of sales in the semiconductor business.
"I don’t know why they agreed to buy it at such an inflated price," Kumar said, who added the FTC story probably was just a "cloak."
Hyundai bought Symbios in February 1995 for $300 million. Hyundai has been hot to sell Symbios to ease a cash crunch caused by South Korea's economic crisis and to finance a $1.3 billion chip plant under construction in Eugene, Oregon. Hyundai is South Korea's No. 2 chipmaker, after Samsung.
Symbios, based in Fort Collins, Colorado, had revenues of $620 million in 1997. It has a well-developed presence in the high-end computer storage market and is a leader in the small computer system interface (SCSI) chip.
The sale to LSI is expected to be completed before 30 September. The Symbios acquisition is the largest in LSI's history and will turn the Milpitas, California, chipmaker into a $2 billion company with 6,800 employees.
