MILPITAS, Calif., March 9, 2011 /PRNewswire-FirstCall/ -- LSI Corporation (NYSE: LSI) today announced that it has signed a definitive agreement to sell its external storage systems business to NetApp, Inc. (Nasdaq: NTAP) for $480 million in cash. The company also announced today that its board of directors has authorized a new stock repurchase program of up to $750 million.
The company is emerging from a multi-year investment cycle which has significantly increased the opportunities and potential of its core semiconductor business. The strategic decision to divest the external storage systems business was based on the company's expectation that long-term shareholder value can be maximized by becoming a pure-play semiconductor company.
"We're excited by the opportunities we have been pursuing in our semiconductor business and are well positioned at the forefront of a strong pipeline of design win ramps that we expect to drive top line growth," said Abhi Talwalkar, LSI president and chief executive officer. "Going forward as a pure-play storage and networking semiconductor company, we believe we can accelerate the achievement of our current business model, establish a richer business model target, and deliver greater long-term shareholder value."
Under terms of the agreement, NetApp will purchase substantially all the assets of the LSI external storage systems business, which develops and delivers Engenio® external storage systems products and technology to a wide range of partners that provide storage solutions to end customers. The business being purchased generated revenues of $705 million in 2010.The LSI RAID adapter business, which develops LSI® MegaRAID® and 3ware® storage controllers and software for direct-attached storage environments, will remain with LSI. Upon closing, most LSI external storage systems employees are expected to join NetApp, a global provider of storage and data management solutions.