QLogic Corp. plans to acquire Ancor Communications Inc. in a bid to strengthen its offerings in storage area networks technology.
QLogic, based here, said Monday it will acquire Ancor, Eden Prairie, Minn., in a stock swap that would have valued Ancor at $1.7 billion as of the close of market on Friday.
However, following the announcement, QLogic's stock dropped $25.19 to $74.74, or about 25 percent. Stock in Ancor closed Monday at $38.19, up $7.
On Friday, the deal would have valued Ancor's stock at $52.71 per share, a hefty 68 percent premium over its Friday close of $31.19.
QLogic manufactures Fibre Channel semiconductors and host-bus adapters, and Ancor manufactures Fibre Channel switches.
The storage industry is moving from point-to-point connections to a switched architecture, and QLogic intends to be a one-source shopping center for products addressing this market, said Larry Fortmuller, vice president of marketing for QLogic.
The acquisition will give QLogic the ability to compete in about 90 percent of the total Fibre Channel peripherals market by 2003, Fortmuller said.
"By buying Ancor, we can account for a bigger slice of the pie," Fortmuller said. "Not only is the pie growing, the part of the pie we address is growing."
The two companies have no overlapping products, Fortmuller said. However, they have overlapping OEM and distribution partners, which he said will help the new company work with its combined base of integration partners.
Integrators also will benefit from greater compatibility between products, he said. "By having host cards and switches under one banner, we can increase interoperability," he said.
The acquisition is expected to close by September and is still subject to shareholder and regulatory approvals.
