Seagate to acquire LSI's flash businesses from Avago

Seagate Technology and Avago Technologies has entered into a definitive asset purchase agreement under which Seagate will acquire the assets of LSI's Accelerated Solutions Division ("ASD") and Flash Components Division ("FCD") from Avago for $450 mn in cash.

"Seagate is committed to providing our customers with a complete range of storage solutions, and this acquisition will significantly enhance our flash storage offerings to supplement our existing portfolio," said Steve Luczo, Seagate chairman and CEO. "LSI's ASD business has the broadest PCIe flash product offering and intellectual property in the market today and the FCD business has best-in-class SSD controllers with proven support for a wide range of applications. This acquisition immediately boosts Seagate's range and depth of flash storage capabilities today, and these teams bring to Seagate the expertise to accelerate our roadmap in this important and growing market."

In FY15, Seagate would expect the combination of its enterprise SSD product line and these SSD Controller families to generate revenues of at least $150 mn and be slightly accretive to the company gross margin with operating margin headwind of $30 to $40 mn. As Seagate drives operational synergies and leverages its SSD technology into its product portfolio, the company would expect the operating margin contribution from its SSD business to be neutral to positive in fiscal 2016 and beyond.