LSI Enters Definitive Agreement to Acquire SandForce

When OCZ acquired SSD controller maker Indilinx this past March, I couldn’t help but wonder what it was that Indilinx offered over SandForce. Of course, the real question should have been about how much more SandForce was worth than Indilinx, and thanks to an acquisition by LSI, that question has been answered.

LSI has entered into a definitive agreement to acquire SandForce for $322 million in cash (OCZ paid $32 million for Indilinx, by comparison), and will assume $48 million of unvested stock options and restricted shares. For a company like SandForce that launched in 2006 and really only become a hit in the market two years ago, the acquisition price is impressive.

Having SandForce operate under its wing is a perfect fit for LSI, a company that creates host bus adapters, RAID cards, SAS switches and much more – not to mention SSDs. While it’s assured that SandForce will continue to create SSD controllers, LSI could borrow some of its newly-acquired technology and knowledge to implement into its other products as well.

Currently, SSD makers OCZ, Corsair, Kingston and others purchase controllers from SandForce, and judging from the press release, that’s not going to change. And well, it shouldn’t. LSI doesn’t focus on end-user products at all, with its own PCIe SSD options selling in the thousands of dollars (making it a competitor to Fusion-io). At the same time, a conflict might arise given that OCZ makes use of SandForce controllers in its own, much cheaper, PCIe solutions. How this will play out, we’re uncertain, but given that this acquisition has to pass regulatory approval first, other SSD vendors wouldn’t have much to worry about at this point.