UPDATE: NetApp To Buy LSI's Engenio Storage Business For $480 Million

SAN FRANCISCO (Dow Jones)- NetApp Inc. (NTAP) said Wednesday it will buy LSI Corp.'s (LSI) external storage systems business for $480 million in cash as the data storage device maker moves to expand its offering of high-end products.

The transaction, which is expected to close in about two months, brings LSI's "Engenio" line of high-end external storage products to Sunnyvale, Calif.-based NetApp. The products are used for video applications, including surveillance and full-motion video capture, as well as high-performance computer programs used for scientific research.

NetApp Chief Executive Tom Georgens said LSI's business would help his company expand into its customer reach.

"We're excited about the acquisition of the Engenio business and the opportunity to significantly expand our addressable market and generate greater revenue growth," he said in a press release.

The acquisition is expected to be accretive to NetApp's earnings by the end of the second quarter of the company's 2012 fiscal year.

The LSI products are used to transfer data at very fast speeds, which is needed as many industries become more data intensive. For example, movie makers often need to transfer large files containing high-definition footage when they process video. Scientists use such products for tasks such as genomics sequencing.

The move comes as NetApp faces increasing competition from larger rivals like Dell Inc. (DELL), Hewlett-Packard Co. (HPQ) and International Business Machines Corp. (IBM), all of which are vying to become one-stop technology shops for their customers.

The deal furthers LSI's strategy of refocusing its business around its core chip operations. The Milpitas, Calif.-based company makes semiconductor chips used in storage and telecommunications equipment, as well as other products.

NetApp's shares were flat in after-hours trades after closing down 0.1% to $51.54. LSI shares were up nearly 4% at $6.37 after closing down roughly 2% to $6.13.

-By Ian Sherr and John Kell, Dow Jones Newswires; 415-439-6455; ian.sherr@dowjones.com

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