* Avago offers $11.15 per share, a premium of 41 pct
* Avago shares rise 11 pct; LSI shares up 39 pct
* Enterprise storage to become biggest revenue contributor
(Adds details from conference call, analyst comments, updates share movement)
Dec 16 (Reuters) - Mobile chipmaker Avago Technologies Ltd said it would buy LSI Corp for $6.6 billion as it turns to the fast-growing storage chip market to counter volatility in its main wireless business.
The explosive growth in cloud storage is driving sales of higher-margin products for storage drive makers such as Seagate Technology Plc, LSI's biggest customer last year.
Avago's shares rose as much as 11 percent to a lifetime high of $50.55 in morning trading on the Nasdaq. LSI shares jumped 39 percent to $10.99, below the $11.15 per share cash offer.
"Storage is a very good place to be," RBC Capital Markets analyst Doug Freedman said.
Avago, which designs and develops analog semiconductors, will get 38 percent of its revenue from enterprise storage after the deal.
Share of the wireless business in Avago's revenues will halve to 25 percent.
This will help reduce its exposure to volatility in the wireless business, which is expected to only increase, Avago CEO Hock Tan said on a conference call with analysts.
The company's customers include Apple Inc, Samsung Electronics Co Ltd, LG Electronics Inc and Huawei Technologies Co Ltd.
The combined company will have about $5 billion in annual revenue.
Silver Lake Partners will help fund the acquisition with a $1 billion investment in the form of a seven-year convertible note. The private equity firm, along with KKR & Co LP, carved out Avago from Agilent Technologies Inc in a $2.66 billion deal in 2005.
The private equity consortium floated Avago in the stock market in 2009 and sold its last shares in the company in 2011, reaping roughly five times its initial $1 billion equity investment, according to regulatory filings.
Avago said the remaining funding for the acquisition will come from a $4.6 billion term loan from a group of banks and $1 billion of cash in hand..
The company said the deal would immediately add to free cash flow and earnings per share on an adjusted basis.
The combined company will have a long-term revenue growth rate of 6-8 percent, with earnings per share growing in the double digits, Hock said on the call.
Avago said the deal would help save $200 million in annual costs by end of the fiscal year ending Nov. 1, 2015, the first full fiscal year after the deal closes.
(Reporting by Sruthi Ramakrishnan and Sampad Patnaik in Bangalore and Greg Roumeliotis in New York; Editing by Sriraj Kalluvila)