Chipmaker Marvell MRVL 71,54 +2,29 +3,31% has announced its intention to acquire smaller rival Cavium CAVM 86,23 0,00 0,00% for $6bn. (Marvell and Cavium to Combine Creating an Infrastructure Solutions Powerhouse.) This deal is dwarfed by the recent Broadcom announcement regarding Qualcomm but is for the same reasons.
Unlike the Broadcom/Qualcomm deal, this is agreed upon by both sides. The deal offers $40 cash and 2.1757 Marvell shares for each Cavium share. The resulting organisation will have a net revenue of $3.4bn/yr. Cavium shareholders will own about 25% of the final business. They will also own a portion of an extra $1.75bn of financing to provide the cash element. Once regulatory approvals are gained, the deal will close in mid-2018.
“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. Syed Ali has built an outstanding company, and I’m excited that he is joining the Board. I’m equally excited that Cavium’s Co-founder Raghib Hussain and Vice President of IC Engineering Anil Jain will also join my senior leadership team. Together, we all will be able to deliver immediate and long-term value to our customers, employees and shareholders.” – Matt Murphy, President and CEO, Marvell
“Individually, our businesses are exceptionally strong, but together, we will be one of the few companies in the world capable of delivering such a comprehensive set of end-to-end solutions to our combined customer base. 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.” – Syed Ali, Co-founder and CEO, Cavium
Marvell will gain Cavium’s multi-core processing, networking communications, storage and security platforms and Intellectual Property. This will add to its existing HDD and SSD storage controllers, wireless connectivity products and networking solutions. Both companies use ARM cores to provide the muscle within these solutions.