Avago Technologies Ltd. (Nasdaq: AVGO) will buy LSI Corp. for $6.6 billion cash in a deal that includes LSI's operations in Fort Collins, the companies said Monday.

Avago, which employs about 870 people at its campus at 4380 Ziegler Road in Fort Collins, said it reached an agreement to buy LSI for $11.15 per share.

LSI (Nasdaq: LSI) employs about 175 people at 2001 Danfield Court in Fort Collins, where the San Jose, Calif.,-based semiconductor and software design company conducts engineering as well as research and development activities for storage and network products.

The acquisition will position Avago, also based in San Jose, as a leader in the data storage market and will expand the company's offerings in wired infrastructure, Avago CEO Hock Tan said in a statement. The combined company will capitalize on growing opportunities in the data center and mobile data traffic sectors.

"This combination will increase the company's scale and diversify our revenue and customer base," Tan said. "In addition to these powerful strategic benefits, as we integrate LSI onto the Avago platform, we expect to drive LSI's operating margins toward Avago's current levels."

The deal, approved by the boards of directors of LSI and Avago, is expected to close in the first half of 2014. Avago said it will fund the transaction with $1 billion in cash, a $4.6 billion term loan from a group of banks and a $1 billion investment from Silver Lake Partners. The deal is subject to approval by regulators and LSI stockholders.

Avago added that the transaction will lead to annual savings of $200 million by Nov. 1, 2015, the end of its fiscal 2015. Avago has a strong presence in Fort Collins, with three expansions of its campus announced within the last three years.

How the acquisition would affect both companies' Fort Collins operations was not immediately clear.

Avago and LSI will begin soon an "integration process" to evaluate how they will come together, an LSI spokesman said.

Founded in 1981, LSI employs about 5,000 people total. The company posted revenue of $2.51 billion in 2012.

In Fort Collins, Avago makes semiconductors in smartphones. The company reported revenue of $2.52 billion in fiscal 2013.

LSI shares surged nearly 39 percent to close at $10.96. Avago shares rose almost 10 percent to close at $50.10.