Marvell Technology has agreed to buy Cavium for about $6 billion as it tries to expand beyond semiconductors that control hard disk drives. The potential deal came to light November 3 when a Wall Street Journal report said the companies were in "advanced" talks.
To view the full article, register now. "The Cavium chip franchise will enable Marvell to further expand into product wings and better compete vs. some of the big boys in the space like Intel and Broadcom". The two will be able to deliver "comprehensive end-to-end solutions" for customers across cloud data center, enterprise and service provider markets, and Marvell's serviceable market.
Shares of Marvell were down 0.8 percent to $20.14, while Cavium was up 7 percent at $81.14 in early trading.
The deal will allow Marvell to diversify away from its traditional storage devices business following an agreement with Starboard Value LP a year ago to accept three new directors nominated by the activist hedge fund to its board.
Cavium has been trying to break into the server microprocessor market using ARM technology.
Another chipmaker making headlines is Broadcom, which offered to buy rival Qualcomm for $105 billion.
The exchange ratio was based on a purchase price of $80 per share, Marvell's share price prior to the first media report of the transaction on November 3. Marvell plans to use $1.75 billion in debt financing to fund the transaction. The acquisition values San Jose-based Cavium at $80 a share.
"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", said Cavium Co-founder and Chief Executive Officer, Syed Ali.
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