LSI Logic Corporation announced an agreement with IBM Corporation calling for LSI Logic to acquire the assets of IBM's Mylex business unit. LSI Logic Storage Systems, Inc. and LSI Logic's Storage Components Group will acquire the Mylex business unit's RAID controllers, subsystems, hardware and software technologies.
LSI Logic will use the purchase method of accounting for the acquisition. The cash transaction is anticipated to close during LSI Logic's third quarter ending September 30 and is expected to be accretive to LSI Logic earnings.
Evaluator Group comments:
This is an outstanding move by LSI Logic Storage Systems Group. With the acquisition of Mylex, LSI now addresses the lower end (departmental and workgroup space) of the storage market. There is very little (if any) product conflict between each company's products. It has been rumored for some time that the Mylex business unit was for sale. Although the purchase price was not disclosed, we suspect LSI was able to acquire Mylex at a bargain. LSI will absorb the engineering and sales staffs into its management structure and maintain Mylex's current customer base. LSI has been the major OEM supplier of distributed storage arrays addressing open systems server and SAN consolidation markets and now has the opportunity to address the entry-level server storage market. The trend continues for the major server vendors to OEM and integrate rather than develop storage products internally. With few major competitors in this area and its reputation as an excellent OEM supplier, the opportunity for LSI is outstanding.
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