Attached files
| file | filename |
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| 8-K - FORM 8-K - Avago Technologies LTD | d644862d8k.htm |
| EX-99.1 - EX-99.1 - Avago Technologies LTD | d644862dex991.htm |
 Your
Imagination, Our Innovation Avago Technologies To Acquire
LSI Corporation
Investor
Presentation
–
December
16,
2013
Exhibit 99.2 |
 Your
Imagination, Our Innovation Cautions Regarding Forward-Looking Statements
Forward Looking Statements
Page 2
This document contains forward-looking statements which address Avago’s
expected future business and financial performance. These forward-looking
statements are based on current expectations, estimates, forecasts and projections of
future Avago or industry performance, based on management’s judgment,
beliefs, current trends and market conditions and involve risks and uncertainties that
may cause actual results to differ materially from those contained in the
forward-looking statements. Accordingly, we caution you not to place undue
reliance on these statements. For Avago, particular uncertainties that could
materially affect future results include our ability to achieve the growth prospects
and synergies expected from acquisitions we may make, including LSI; delays,
challenges and expenses associated with integrating acquired companies with our
existing businesses, including LSI; global economic conditions and concerns;
cyclicality in the semiconductor industry or in our target markets; loss of our
significant customers; increased dependence on the volatile wireless handset market;
quarterly and annual fluctuations in operating results; our competitive performance and
ability to continue achieving design wins with our customers; market acceptance
of the end products into which our products are designed; our target markets not growing as quickly as expected; our dependence on contract
manufacturing and outsourced supply chain and our ability to improve our cost structure
through our manufacturing outsourcing program; prolonged disruptions of our or
our contract manufacturers’ manufacturing facilities or other significant operations; our dependence on outsourced service providers for certain key
business services and their ability to execute to our requirements; our ability to
maintain or improve gross margin; our ability to maintain tax concessions in certain
jurisdictions; our ability to protect our intellectual property and any associated
increases in litigation expenses; dependence on and risks associated with
distributors of our products; our ability to attract, retain and motivate qualified
personnel, particularly design and technical personnel; any expenses associated
with resolving customer product and warranty and indemnification claims; and other
events and trends on a national, regional and global scale, including those of a
political, economic, business, competitive and regulatory nature.
Important additional risk factors that may cause such a difference for Avago in
connection with the acquisition of LSI include, but are not limited to unexpected
variations in market growth and demand for, matters arising in connection with the
parties’ efforts to comply with and satisfy applicable regulatory clearances and
closing conditions relating to the transaction and closing conditions relating to the
transaction, the risks inherent in acquisitions of technologies and businesses,
including the timing and successful completion of technology and product development
through volume production, integration issues, costs and unanticipated
expenditures, changing relationships with customers, suppliers and strategic partners,
potential contractual, intellectual property or employment issues and charges
resulting from purchase accounting adjustments or fair value measurements.
Avago’s Quarterly Report on Form 10-Q filed on September 13, 2013 and other
filings with the SEC (which may be obtained for free at the SEC’s website at
http://www.sec.gov) discuss some of the important risk factors that may affect
Avago’s business, results of operations and financial condition. Avago undertakes
no intent or obligation to publicly update or revise any of these forward looking
statements, whether as a result of new information, future events or otherwise,
except as required by law.
|
 Your
Imagination, Our Innovation Strategically & Financially Compelling
Transaction Enhances Avago’s platform to deliver long-term stockholder
value Positions Avago as a leader in the enterprise storage market
Expands Avago’s market position and brings valuable
system-level expertise in wired infrastructure
Increases Avago’s scale and diversifies revenue
Immediately accretive to free cash flow and non-GAAP
earnings per share
Combination creates a highly diversified market leader
Page 3
Non-GAAP results exclude, where applicable, amortization of intangibles, advisory
agreement termination fee, selling shareholder expenses, restructuring charges,
share-based compensation, discontinued operations and loss on extinguishment of debt. All leverage multiples are based on pro forma EBITDA adjusted for
divestitures / acquisitions for the particular time period. |
 Your
Imagination, Our Innovation Key
Customers
LSI is a Leader in Specific Key End Markets
End Markets
SoCs
Pre-Amplifiers
Key Product
Families
Hard Disk Drives
Storage Connectivity
Flash
Networking
SAS
Controllers
RAID Solutions
SSD
Controllers
PCIe
Flash
Cards
Network
Processors
Enterprise &
Telecom ASICs
Enterprise Storage
Page 4
Wired Infrastructure
Note: “Enterprise Storage” and “Wired Infrastructure” reflect
Avago’s definition of end markets |
 Optimized
System-Level Solutions for Wired Infrastructure Optimized Systems
SoCs/Software
Processors
SerDes ASICs
Datacenter
Enterprise Networking
Communications Infrastructure
Page 5
Fiber Optic
Your Imagination, Our Innovation |
 Increases
Scale and Diversifies Revenue Source: Company filings and
presentations Avago
LTM Revenue: $2,520M
(11/4/13)
Industrial & Other
23%
Wired
Infrastructure
29%
Wireless Comms
48%
LSI
Combined
LTM Revenue: $4,885M
Page 6
LTM Revenue: $2,365M
(9/29/13)
Other, 5%
Networking
17%
Storage
78%
Industrial & Other
14%
Wired
Infrastructure
23%
Wireless Comms
25%
Enterprise
Storage
38%
Your Imagination, Our Innovation |
 Transaction Overview
$11.15 per share in cash
Per Share
Consideration
Sources of Financing
Expected Closing
Equity Value
Approval Process
$6.6 billion
$1.0 billion cash from combined company balance sheet
$4.6 billion of fully committed term loans
$1.0 billion investment from Silver Lake Partners
Approval by LSI’s stockholders
Certain regulatory approvals
First half 2014, subject to customary closing conditions
Page 7
Your Imagination, Our Innovation |
 Your
Imagination, Our Innovation Transaction Financing
Credit Facility
$4.6 billion of term loans underwritten by a group of banks
Variable interest rate; would be 3.5% blended interest rate today
Seven year term
$500 million revolving credit facility (undrawn)
Facility allows for dividends
Silver Lake
Convertible Note or
Preferred Stock
$1.0
billion
of
2%
senior
unsecured
notes
convertible
at
$48.04
per
share
or
preferred stock with the same economics
Pro Forma
Capitalization
Statistics
EBITDA
Excluding
Including
(Includes $200M synergies)
SLP Note
SLP Note
Gross Debt / LTM EBITDA
3.1x
3.8x
Net Debt / LTM EBITDA
2.6x
3.3x
LTM EBITDA / Interest
8.1x
7.3x
Page 8
Matures three months after term loan |
 Your
Imagination, Our Innovation Q&A
Page 9 |
 Your
Imagination, Our Innovation Additional Information and Where to Find It;
Participants in Solicitation
Page 10
This communication is being made in respect of the proposed transaction involving LSI
Corporation (“LSI”) and Avago Technologies Limited (“Avago”). The
proposed transaction will be submitted to the stockholders of LSI for their
consideration. In connection with the proposed transaction, LSI will prepare a proxy
statement to be filed with the SEC. LSI and Avago also plan to file with the SEC
other documents regarding the proposed transaction. LSI’S SECURITY
HOLDERS ARE URGED TO READ THE PROXY STATEMENT REGARDING THE PROPOSED TRANSACTION AND
ANY OTHER RELEVANT DOCUMENTS CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME
AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED
TRANSACTION. When completed, a definitive proxy statement and a form of proxy will be mailed to the stockholders of LSI. Investors will be able
to obtain, without charge, a copy of the proxy statement and other relevant documents
(when available) filed with the SEC from the SEC’s website at
http://www.sec.gov. Investors will also be able to obtain, without charge, a copy
of the proxy statement and other relevant documents (when available) by going to
www.lsiproxy.com, by writing to LSI Corporation, 1110 American Parkway NE, Allentown,
PA 18109, Attn: Response Center, or by calling 1 (800) 372-2447.
LSI and Avago and their respective directors, executive officers may be deemed to be
participants in the solicitation of proxies from LSI’s stockholders with
respect to the meeting of stockholders that will be held to consider the proposed
Merger. Information regarding LSI’s directors and executive officers is contained
in LSI’s Annual Report on Form 10-K for the year ended December 31, 2012, the
proxy statement for LSI’s 2013 Annual Meeting of Stockholders, which was filed
with the SEC on March 28, 2013, and subsequent filings which LSI has made with the
SEC. Information regarding Avago’s directors and executive officers is
contained in Avago’s Annual Report on Form 10-K for the year ended October 28,
2012, the proxy statement for the Avago’s 2013 Annual Meeting of
Stockholders, which was filed with the SEC on February 20, 2013, and subsequent filings
which Avago has made with the SEC. Investors may obtain additional
information regarding the interests of LSI and its directors and executive officers in
the proposed Merger, which may be different than those of LSI’s stockholders
generally, by reading the proxy statement and other relevant documents regarding the
proposed Merger, when it becomes available. You may obtain free copies of
this document as described in the preceding paragraph.
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