LSI Logic ( LSI) said Monday it will acquire C-Cube ( CUBE) for $878 million in stock. The news catapulted C-Cube's share price in pre-open trading.

C-Cube, which designs semiconductors and software for digital video applications, will exchange each of its common shares for 0.79 shares of LSI Logic stock. LSI Logic supplies chips for broadband and wireless applications. Both companies are based in Milpitas, Calif.

The deal will likely close in LSI Logic's second quarter, which ends June 30.

In pre-open Instinet trading, LSI fell 94 cents to $19.75 after closing at $20.69 on Friday. C-Cube was up to $14.37, a gain of $5.56 from Friday's $8.81 close on the Nasdaq.