Adaptec Sells Its RAID Channel Business to PMC-Sierra

1/ The press release of Adaptec

Adaptec, Inc. signed a definitive agreement with PMC-Sierra, Inc. to sell to PMC certain assets and for PMC to assume certain liabilities connected with the Company’s data storage hardware and software business for approximately $34 million in cash. Following the sale to PMC-Sierra, the Company will retain its Aristos ASIC technology business, certain real estate assets, more than 200 patents, and approximately $400 million in cash and marketable securities.

Since 2009, the Company has set forth plans to re-deploy the substantial amount of liquid assets and unlock the tax benefits of the Company’s net operating losses to maximize value for all stockholders. Following this transaction with PMC-Sierra, the Company’s Board of Directors plans to explore all strategic alternatives to deploy the proceeds of the sale and the Company’s other assets, which may include stock buybacks, special cash dividends, future acquisitions and other actions to redeploy capital. Additionally, the Company will, as previously announced, continue to consider its options related to its Aristos ASIC technology business, remaining patents and real estate holdings.

"Over the last two years, the Company’s stockholders made abundantly clear that they demand a change in the direction of the Company to realize value from the Company’s historical operating units. This transaction with PMC-Sierra, which represents the sale of a small portion of the Company’s total assets, represents that change and continues the process of moving the Company away from its previous unprofitable identity as a ‘pure-play’ technology company," said Jack Howard, Chairman of the Board of Adaptec. "The Board of Directors remains committed to providing value to all of the Company’s stockholders, and will aggressively pursue opportunities to deploy the significant cash and liquid assets on hand to create value for the Company’s stockholders."

The Board of Directors of the Company retained Blackstone Advisory Partners L.P. in June of 2009 to assist Adaptec in analyzing and exploring strategic alternatives, and launched a broad auction sale process for the Company’s operating assets in September of 2009. Following a thorough sale process, the Board determined that the transaction with PMC was in the best interest of the Company’s stockholders. The Board of Directors of the Company received a written opinion from Blackstone to the effect that, as of the date of the opinion and based upon and subject to the various considerations set forth in the opinion, the consideration to be received by Company in the transaction is fair from a financial point of view.

The transaction, which is not subject to the waiting period under the Hart-Scott Rodino Act or to Adaptec shareholder approval, is scheduled to close in approximately thirty days, pending the satisfaction of certain customary closing conditions.

2/ The press release of PMC-Sierra

PMC-Sierra, Inc. has entered into a definitive agreement with Adaptec, Inc. to acquire its channel storage business. The channel storage business includes Adaptec’s RAID storage product line, a well-established global value added reseller customer base, board logistics capabilities, and leading SSD cache performance solutions. PMC-Sierra will pay approximately $34 million in cash for the acquisition and assume certain liabilities related to the business. The transaction is expected to close in approximately 30 days, subject to customary closing conditions.

PMC-Sierra expects the acquisition will strengthen the Company’s existing enterprise storage business by accelerating access to channel customers. PMC-Sierra is committed to delivering and developing high-performance, reliable RAID solutions for our OEM and channel storage customers from SAS-1 to SAS-3. Based on industry data, PMC-Sierra estimates total channel revenues for x86 RAID products to be approximately $200 million. Adaptec is the second largest supplier of x86 RAID products through the channel.

"The acquisition of Adaptec’s channel storage business allows us to accelerate our entry into a new segment of enterprise RAID storage and leverages our leading RAID chip and software development with channel customers," said Greg Lang, PMC-Sierra’s president and CEO. "I am excited about this acquisition and the future growth opportunities it presents through the strong strategic fit between our core strengths in enterprise storage and the established channel storage business of Adaptec."

PMC-Sierra expects to employ approximately 90 individuals from Adaptec located in seven different geographies, with the majority of the personnel located in California.