LSI Tech gives the semiconductor specialist from Singapore a shot at the enterprise storage market.

Avago Technologies, a semiconductor company based in Singapore with U.S. headquarters in San Jose, Calif. announced plans today to acquire data storage chipmaker LSI for $11.15 per share, or $6.6 billion, in an all-cash deal.

The transaction has been approved by both boards of directors and is expected to close during the first half of 2014, pending regulatory approvals and the go-ahead from LSI shareholders. Avago will be financing the purchase with $1 billion of its own funds, $4.6 billion in bank loans, and a $1 billion investment from Silver Lake Partners, a Silicon Valley-based private equity firm.

The companies expect that folding LSI into Avago, which specializes in chips for wired and wireless networks, will push the combined entity’s annual revenues into the $5 billion range and achieve $200 million in cost savings by 2015. Avago’s foray into the enterprise data storage market is expected to result in a company “strongly positioned to capitalize on the growing opportunities created by the rapid increases in data center IP and mobile data traffic,” said the firm in a statement.

Avago president and CEO, Hock Tan, said in press remarks that the deal “positions Avago as a leader in the enterprise storage market and expands our offerings and capabilities in wired infrastructure, particularly system-level expertise.” Further, it will help increase the chipmaker’s “scale and diversify our revenue and customer base.”

LSI, a storage networking specialist and maker of host bus adapters, helps Avago make inroads into the lucrative data center market. In 2012, the company announced Nytro, a line PCIe flash adapter cards that provide performance-enhancing server-side storage. A year earlier, it shed its Engenio storage array business, selling it to NetApp for $480 million.

Avago creates chips and components for wireless communications, wired infrastructure and industrial applications. Founded in 1961, the company offers a wide range of solutions for data networks, telecommunications equipment, mobile devices and industrial automation systems. For fiscal year (FY2013) the company posted net revenues of $2.52 billion and profits of $731 million (non-GAAP).

LSI’s tech will soon enable Avago to “develop a wider range of leading-edge solutions for customers,” said LSI president and CEO Abhi Talwalkar in a statement. “Our leadership positions in enterprise storage and networking, in combination with Avago, create greater scale to further drive innovations into the datacenter,” he added.

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