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Cavium and QLogic sitting in a tree, S I G N I N G

Chip designer plonks US$1.3 billion on table for data centre push

By Richard Chirgwin, 16 Jun 2016

Cavium's hoping to launch a big data centre push on the back of its US$1.3 billion acquisition of server and storage networking outfit QLogic.

The cash-and-shares buy will give Cavium a more direct footprint in the data centre, as well as the $350 million-plus on QLogic's balance sheet.

Cavium says QLogic's connectivity and storage solutions is a nice fit with its networking, compute and security chips, and will let it create products targeting more than $2 billion in new opportunities in enterprise, cloud, data centre and telco customers.

The two outfits count Dell, EMC, HPE, Lenovo, NetApp, Pure Storage, IBM and Oracle among their customers, and say there's less than 10 per cent overlap in their customer base.

The target's staff will be thrilled to know that Cavium reckons there's $45 million worth of “annualised cost synergies”, even though QLogic's executive chair Christine King says the combination is a win for “customers and employees” as well as shareholders.

Cavium will have to raise $400 million in new equity to complete the deal, along with $100 million in short-term bridging debt and $650 million in long-term debt.

Subject to the usual regulatory approvals, the acquisition is due to close in the third quarter of this year. ®

The Register - Independent news and views for the tech community. Part of Situation Publishing