QLogic Corporation (NASDAQ:QLGC) had a late rally to $15.15 in after-hours trading on Wednesday after the company announced that it will be acquired by Cavium Inc. The company has a market cap of $1.15 billion at 83.19 million shares outstanding. Shares are at the top of the 52-week range of $8.37 to $15.75.
QLogic Corporation is a company that designs and supplies server and storage networking connectivity products that provide and manage computer data communication. These products products facilitate the transfer of data and enable resource sharing between servers, networks and storage and are used in enterprise, managed service provider, consumer Web, and cloud service provider data centers, along with other environments dependent on data networking.
Cavium and QLogic Corporation declared that they have entered into a definitive agreement for the former to acquire the latter’s outstanding common stock for approximately $15.50 per share, with $11.00 per share in cash and 0.098 of a share of Cavium common stock, which is valued at approximately $4.50, for each share of QLogic common stock.
This transaction amounts to $1.36 billion in equity value, inclusive of approximately $355 million of cash on QLogic’s balance sheet, and has been unanimously approved by the boards of directors of both companies. With this acquisition agreement, QLogic Corporation’s portfolio of advanced connectivity and storage solutions would complement Cavium’s portfolio of networking, compute, and security solutions. In addition, the combined consumer base would allow the companies to benefit from diverse revenue sources.
This transaction is currently under investigation by Robbins Arroyo LLP, which will evaluate whether the board of directors at QLogic Corporation is undertaking a fair process to obtain maximum value and adequately compensate its shareholders. The transaction will be funded with a combination of $220 million balance sheet cash, $750 million of committed financing, comprised of $650 million of term loan and $100 million of short-term bridge debt, as well as $400 million in new Cavium equity.
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