QLogic Corp. (Nasdaq: QLGC), which makes high-speed components, said Monday it will buy Ancor Communications (Nasdaq: ANCR) in a stock swap valued at about $1.7 billion.
Ancor (profile), which makes fiber switches for data storage networks, has been on a tear of late. Ancor soared last week after it inked a pact with data storage provider EMC (NYSE: EMC). The company last week also reported a first quarter net loss of $2 million, or 7 cents a share, on sales of $7.2 million.
Under the terms of the deal, which has been approved by both companies, QLogic will exchange 0.5275 shares of its common stock for each share of Ancor, the companies said. The deal values each Ancor share at more than $52, a $20 premium compared to its Friday closing price.
QLogic (profile) said investors will have to wait for a bottom line payoff, however. The company said the acquisition will be accretive to its earnings in its fiscal year ended March 2002. QLogic reports its fourth quarter earnings Wednesday. First Call Corp is expecting a profit of 21 cents a share.
The Ancor purchase will be accounted for as a pooling of interests with a close sometime in the third calendar quarter, said QLogic.
QLogic said Ancor will add to its fibre channel technology portfolio. QLogic has been expanding from its core business of making integrated circuit controllers. Ancor CEO Ken Hendrickson will become a member of QLogic's board of directors once the deal closes.
According to Hoover's, Ancor competes with Brocade Communications (Nasdaq: BRCD) and Vixel (Nasdaq: VIXL). QLogic competes with Texas Instruments (NYSE: TXN) and LSI Logic (NYSE: LSI).