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Semiconductor devices

Intel Acquires Level One Communications in $2.2 Billion Merger

Strategic Insights

— 1 min read

Intel Corporation and Level One Communications have agreed to a definitive stock-for-stock merger valued at approximately $2.2 billion. This acquisition aims to enhance Intel's networking capabilities by offering increased bandwidth and functionality through silicon integration, making it a leading component supplier in the rapidly growing Internet and Intranet equipment market segments. Level One, a Sacramento-based company, specializes in silicon connectivity solutions for high-speed telecom and networking applications.

Key Takeaways:

  • The acquisition value is approximately $2.2 billion, with each Level One share being exchanged for 0.43 shares of Intel stock.
  • The merger will be accounted for using the purchase accounting method and is subject to regulatory review, Level One stockholder approval, and other normal closing conditions.
  • Upon completion, Level One will become a wholly-owned subsidiary of Intel, reporting into Intel's Network Communications Group, and all Level One employees will continue to work for the subsidiary.
  • The companies do not anticipate any immediate changes to either of their product lines, and Level One intends to continue using its existing manufacturing relationships and providing its products to customers under existing agreements.
  • Level One's president and CEO, Robert Pepper, will join Intel as vice president of the company's Network Communications Group and general manager of the Level One Components Division.
  • Mark Christensen, vice president and general manager of Intel's Network Communications Group, stated that the companies have a common vision and corporate cultural values, making them a great match.

Statistics:

  • The total number of shares of Intel stock to be issued is approximately 18.6 million, including the presumed conversion of Level One's outstanding convertible subordinated notes into Level One common stock.
  • The exchange rate and the total number of shares will be adjusted for Intel's previously announced 2 for 1 stock split.
  • The transaction is expected to be completed by the end of the second quarter of 1999.

Sources:

  • Level One Communications (Nasdaq: LEVL)
  • Intel Corporation
  • Intel website: www.intel.com
  • Level One website: www.level1.com

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