LSI acquires SandForce for $370 million, looks to step up its SSD game

SandForce has been behind many an SSD in its day, but it looks like it's finally about to settle down, and get hitched. Yesterday, LSI announced plans to acquire the flash storage company, as part of a $370 million agreement. The deal brings SandForce's processors and energy efficient DuraClass technology under LSI's roof, giving the semiconductor designer some new flash firepower and an extra boost into a burgeoning market. Tangible results, of course, remain to be seen, though it's certainly not the first time these two have danced. SandForce, after all, provided the motor for LSI's WarpDrive lineup, and will presumably do much more, once the deal goes through. Pending regulatory approval, the acquisition should be finalized by the first quarter of 2012. Full PR after the break.

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LSI Announces Agreement to Acquire SandForce

Acquisition of leading provider of flash storage processors extends LSI's industry-leading position and breadth in storage technology solutions

MILPITAS, Calif., Oct. 26, 2011 /PRNewswire/ -- LSI Corporation (NYSE: LSI) today announced that it has signed a definitive agreement to acquire SandForce, Inc., the leading provider of flash storage processors for enterprise and client flash solutions and solid state drives (SSDs). Under the agreement, LSI will pay approximately $322 million in cash, net of cash assumed, and assume approximately $48 million of unvested stock options and restricted shares held by SandForce employees.

SandForce's award-winning products include flash storage processors at the heart of PCIe flash adapters and SSDs. Flash storage processors provide the intelligence required to deliver the performance and low-latency benefits of flash storage in enterprise and client applications. With market-proven, differentiated DuraClass™ technology, SandForce flash storage processors improve the reliability, endurance and power efficiency of flash-based storage solutions.

The acquisition greatly enhances LSI's competitive position in the fast-growing server and storage PCIe flash adapter market, where the WarpDrive™ family of products from LSI already uses SandForce flash storage processors. The complementary combination of LSI's custom capability and SandForce's standard product offering propels LSI into an industry-leading position in the rapidly growing, high-volume flash storage processor market space for ultrabook, notebook and enterprise SSD and flash solutions.

"Flash-based solutions are critical for accelerating application performance in servers, storage and client devices," said Abhi Talwalkar, LSI president and chief executive officer. "Adding SandForce's technology to LSI's broad storage portfolio is consistent with our mission to accelerate storage and networking. The acquisition represents a significant, rapidly growing market opportunity for LSI over the next several years."

Michael Raam, SandForce president and CEO, said, "The combination of SandForce and LSI allows us to deliver differentiated solutions in the PCIe flash adapter segment by tightly integrating flash memory and management. In addition, leveraging our flash storage processors with LSI's comprehensive IP portfolio and leading-edge silicon design platforms will lead to innovative solutions."

The transaction is expected to close early in the first quarter of 2012 subject to customary closing conditions and regulatory approvals. Upon closing, the SandForce team will become part of LSI's newly formed Flash Components Division, with Raam as general manager.

LSI expects the acquisition to be neutral to non-GAAP* earnings per share in 2012. The company will provide further details during its conference call at 2 p.m. PDT today and discuss third quarter results and the fourth quarter 2011 business outlook.