For $4 billion in stock LSI Logic will buy Agere Systems. Agere shareholders will receive 2.16 shares of LSI for each share of Agere they own. The combined company, to be called LSI Logic Corporation, will offer building block solutions including semiconductors, systems and related software for storage, networking and consumer electronics products. The companies had combined revenue of $3.5 billion for the 12 months ended September 30, 2006. LSI recorded 2005 revenues of $1.92 billion. Agere reported a revenue of $1.57 billion for the year 2006. The companies operate with a combined workforce of approximately 9,100 employees.

LSI will issue approximately 379 million shares on a diluted basis to complete the transaction. At that time, LSI and Agere shareholders will own approximately 52% and 48%, respectively, of the combined company. The combined company also expects to realize substantial cost savings beginning in 2007, with annual cost savings reaching at least $125 million in 2008. LSI president and chief executive officer Abhi Talwalkar will serve as president and chief executive officer of the new company, which will be headquartered in Milpitas, California. The companies expect the transaction to close in the first calendar quarter of 2007.