Emulex, a provider of converged networking offerings for the data centre, has agreed to acquire fabless semiconductor firm ServerEngines, in a cash-and-stock deal worth $159m, in a move to strengthen its position in the network convergence market.
Emulex will pay approximately $78m in cash and eight million shares of Emulex stock to be issued at closing price of $10.11 per share. The agreement further provides for the payment of an additional four million shares of Emulex stock, which will be issuable if the ServerEngines business achieves certain milestones targeted for completion by the end of 2011.
In addition, Emulex will also assume the outstanding ServerEngines debt, including debt owed to Emulex, which is currently $25m, other liabilities and ServerEngines stock options upon close.
Founded in 2004 and headquartered in Sunnyvale, California, ServerEngines has approximately 170 employees based in Sunnyvale, California; Austin, Texas and Hyderabad, India. It has two product families focused on the server and storage market including, BladeEngine family of 10Gb/s Ethernet ASICs and Pilot family of Server Management Controllers.
Jim McCluney, president and CEO of Emulex, said: “Over the past two years, our partnership model with ServerEngines has been an extremely effective strategy to establish Emulex in both the 10Gb/s Ethernet and converged networking markets.
“However, the combination of ServerEngines’ Ethernet and Internet Small Computer System Interface (iSCSI) expertise with our own data centre technologies and world-class engineering team in an acquisition provides a significant opportunity to solidify Emulex’s Ethernet-driven network convergence strategy for 2011 and beyond.”
