Semiconductor M&A continues with Marvell snapping up Cavium

News

Marvell has agreed to buy rival Cavium in a deal worth around $6 billion, as M&A activity in the semiconductor space continues.

The deal will create a company with sales of approximately $3.4 billion per year.

Marvell said the takeover will bring together its storage, networking and wireless products with Cavium's multi-core processing, network, storage and security solutions to create "a leader in infrastructure solutions".

It added: "This transaction also creates an R&D innovation engine to accelerate product development, positioning the company to meet today’s massive and growing demand for data storage, heterogeneous computing and high-speed connectivity."

Marvell is paying $40 and 2.1757 of its common shares per Cavium share. The latter's shareholders will own roughly a quarter of the new company upon completion.

The merger is expected to close during the middle of next year, so long as it clears regulatory hurdles and is approved by shareholders of both companies.

Marvell President and CEO Matt Murphy, who will be in charge of the new company, said: “This is an exciting combination of two very complementary companies that together equal more than the sum of their parts.

“This combination expands and diversifies our revenue base and end markets, and enables us to deliver a broader set of differentiated solutions to our customers.

"[Cavium Co-Founder and CEO] Syed Ali has built an outstanding company, and I’m excited that he is joining the Board...Together, we all will be able to deliver immediate and long-term value to our customers, employees and shareholders.”

Ali added: “Our potential is huge. We look forward to working closely with the Marvell team to ensure a smooth transition and to start unlocking the significant opportunities that our combination creates.”

Both Marvell and Cavium trail significantly behind the semiconductor big-hitters, with the market dominated by Intel and Samsung.

Broadcom, which itself was taken over by Avago in 2015, had its offer to buy Qualcomm earlier this month rebuffed, accusing it of significantly undervaluing the company.