Marvell to buy chip company Cavium for $6 billion

21 November, 2017, 00:54 | Author: Alicia Barber
  • Report: Chipmaker Marvell to buy rival firm Cavium for around $6 billion

Marvell Technology Group Ltd. announced on November 20 that it has reached an agreement to acquire Cavium Inc. Broadcom is also in the process of acquiring Brocade Communications for $5.5 billion, while Qualcomm is in the middle of a $38 billion bid to buy NXP Semiconductors to expand further in the automotive-chip market.

Marvell, which has been trying to diversify from its storage devices business, had come under pressure from Starboard Value past year, when the activist investor called the company undervalued.

Analysts say the new leadership is preparing a number of important new product launches for later this year after refreshing 25 products in 18 months.

The deal is expected to close in mid-2018.

Marvell and Cavium each have complementary product sets spanning enterprise, cloud data center and service provider networks.

Within the agreement; Syed Ali, Cavium's Chairman and CEO; Raghib Hussain, the company's Co-founder; and Anil Jahin, Vice President of IC Engineering will join the Board of Directors at Marvell.

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In the last two years, the chip industry has witnessed a series of deals as companies try to gain market share in emerging areas such as automotive technologies and connectivity.

Another chipmaker making headlines is Broadcom, which offered to buy rival Qualcomm for $105 billion.

Marvell plans to announce its cash-and-stock acquisition of Cavium on Monday, the sources said, asking not to be identified ahead of an official announcement.

The deal will see Marvell paying $40 for each Cavium common share and giving each shareholder 2.1757 Marvell common shares.

Marvell intends to fund the acquisition from cash on hand from the combined companies and $1.75 billion in debt financing.

Goldman Sachs was the financial adviser to Marvell while Qatalyst Partners and JP Morgan Securities were the financial advisers to Cavium.

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