Six hundred and fifty million dollars — all in cash.
That’s the amount Intel has agreed to pony up for Avago Technologies LSI’s Axxia Networking Business. Intel is paying cash for the assets.
The two are still cementing the deal, but it has been approved by the boards of both companies. Pending government regulatory approval, the two sides hope to have the deal in the can by the end of the fourth quarter.
Avago, which produces semiconductors, acquired LSI late last year for $6.6 billion in cash. This deal means Avago is divesting itself of LSI’s Networking Business, which generated over $110 million last year. LSI’s Networking Business employs more than 600.
Avago bought LSI to buttress its presence in cloud-based services and the mobile ecosystem. A blog post from Rose Schooler analyzing the deal and what it portends for Intel’s Data Stack put it this way:
“The opportunity here is significant and wireless access is a critical component of the mobile network, which is part of a growing network market segment estimated to represent a $16 billion silicon market segment. The acquisition of the Axxia Networking Business will further help Intel realize our vision of transforming wireless access into an intelligent, flexible network based on standard building blocks to fuel innovation and increase network efficiencies.”
Avago makes analog semiconductor devices that support enterprise storage, wired infrastructure and wireless communications. Axxia’s Networking Business System focuses on System on Chip (SoC) technology for networks with an eye towards mobile network infrastructure.
For Intel, the key to this deal is mobile, an industry that will surmount $36 billion by year’s end, according to eMarketer. Ultimately, the deal will mean enhancements to Intel’s Data Center Group, which works on network issues.