QLogic Acquires Ancor Communications for $1.7 Billion
By Cindy Christ
Shares in QLogic took a dive Monday after the computer device
maker said it would acquire Ancor Communications in a $1.7
billion stock deal to buoy its position in the booming market
for high-speed storage networks.
Eden Prairie, Minn.-based Ancor Communications provides fibre
channel switches for storage area networks or SANs, which are
networks connecting a company's data storage systems and
computer servers.
QLogic (QLGC) shares plunged $25.19, or more than 25 percent,
to $74.75 on the news. Ancor (ANCR) shot up $7, or 22.4
percent, to $38.19.
Under terms of the deal, Ancor stockowners will receive 0.5275
shares of QLogic common stock for each Ancor share, an
exchange ratio that initially valued Ancor at $52.71, a 69
percent premium over Friday's $31.19 closing price. But the
sharp drop in QLogic's share price Monday shrank the premium
to 26 percent, or $39.43 per share.
The transaction is being made under pooling-of-interests
accounting rules and as a tax-free exchange.
The companies expect the deal, which is subject to shareholder
and regulatory approval, to close in the third quarter.
QLogic, based in Aliso Viejo, Calif., said the acquisition
would be neutral or accretive to earnings in 2001 and add to
earnings in 2002.
Ancor's CEO Ken Hendrickson will be nominated to QLogic's
board of directors.
The companies said the acquisition will extend QLogic's
product line based on fibre channel technology, a system for
transmitting data between computer devices at a rate of up to
1 gigabit, or one billion bits per second.
"With the addition of Ancor's performance-oriented, scaleable
switch products, QLogic will be uniquely positioned to deliver
total SAN solutions to the marketplace," said H.K. Desai,
QLogic chairman, president and CEO.
Analysts said the combination creates "the first one-stop shopping vendor in the fiber channel SAN industry," according to Reuters.
Demand for high-speed storage products is red hot thanks to
explosive growth in data generated from the Internet and e-
mail use.
