Seagate is set to pay $US450 million in cash for Avago's Accelerated Solution Division in a move to strengthen the storage vendor's capabilities in flash.
Seagate 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 $US450 million in cash.
According to a company statement, the acquisition strengthens Seagate's strategy to deliver a full suite of storage solutions, providing Seagate with established Enterprise PCIe flash and SSD controller capabilities to deliver solutions for the growing flash storage market.
LSI's ASD business, which is the second largest player in the PCIe flash space, offers a highly differentiated enterprise-grade PCIe flash solution focused on the high-growth cloud and hyperscale markets.
LSI's FCD business, led by its SandForce SF2000 and SF3700 controller products, is driving a multi-product roadmap to address volume markets.
Seagate chairman and chief executive, Steve Luczo, said the company was committed to providing our customers with a complete range of storage solutions.
"This acquisition will significantly enhance our flash storage offerings to supplement our existing portfolio," he said.
"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.
He said the acquisition immediately boosted Seagate's range and depth of flash storage capabilities today.
According to a company statement, Seagate expects the combination of its enterprise SSD product line and these SSD Controller families to generate revenues of at least $150 million
"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," the statement said.
The transaction is expected to close in the third quarter of this year.