NEW YORK (TheStreet) -- Shares of QLogic (QLGC) are climbing 9.9% to $14.88 on heavy trading volume Thursday afternoon after the networking infrastructure solutions provider agreed to be bought by chip maker Cavium (CAVM) in a deal valued at $1.36 billion.
After yesterday's closing bell, San Jose, CA-based Cavium said it would acquire the company for $15.50 in cash and stock per each QLogic share.
QLogic shareholders will receive $11 in cash and 0.098 of a Cavium share.
Barclays maintained its "equal weight" rating and $13 price target on QLogic stock following the announcement.
Prior to the acquisition, the firm projected lack of any significant growth before 2017 and 2018.
"QLGC has announced design wins for its 25/50/100G Ethernet business, but those are not expected to contribute to revenues in a significant manner in the near term and that business is still small compared to its Fibre Channel business," Barclays said in a note earlier today.
The fibre channel end market, which is about 80% of the company's revenue base, has been benefiting from growth in all flash arrays, but is still flat to slightly declining, the firm noted.
"The balance sheet is strong, but 85% of its $355 million in cash is overseas," Barclays added.
About 7.57 million of QLogic's shares were traded so far this afternoon, well above its average volume of 596,758 shares per day.
Cavium stock is diving 16.25% to $40.20 on heavy trading volume Thursday afternoon following the acquisition announcement and several downgrades.
Roughly 8.37 million of the company's shares were traded so far today vs. its average volume of 1.03 million shares per day.
Separately, TheStreet Ratings Team has a "Hold" rating with a score of C+ on QLogic stock.
The primary factors that have impacted the rating are mixed. The company's strengths can be seen in multiple areas, such as its increase in net income, largely solid financial position with reasonable debt levels by most measures and expanding profit margins.
However the team also finds weaknesses including disappointing return on equity and a generally disappointing performance in the stock itself.
Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
You can view the full analysis from the report here: QLGC