LSI Logic and C-Cube Microsystems today announced a definitive merger agreement in which LSI Logic has agreed to acquire C-Cube in a stock-for-stock transaction valued at approximately $878 million. In the transaction, each outstanding share of C-Cube common stock is to be exchanged for 0.79 of a share of LSI Logic common stock.
LSI Logic anticipates completing the transaction in its second quarter ending June 30, and expects the transaction to be accretive to the company’s earnings before goodwill amortisation (EBG) in 2001.
Under the terms of the definitive merger agreement, LSI Logic will first commence an exchange offer whereby it will offer 0.79 of a share of LSI Logic common stock for each outstanding share of C-Cube common stock. The exchange offer will be followed by a merger in which LSI Logic would acquire, at the same exchange ratio, the remaining shares of C-Cube common stock not previously acquired in the exchange offer. Upon completion of the merger, all outstanding options to purchase C-Cube common stock will be assumed by LSI Logic and converted into options to purchase LSI Logic common stock.
The transaction is expected to be accounted for under the purchase method of accounting and to qualify as a ‘tax-free’ reorganisation for US federal income tax purposes.