Chipmaker Marvell Technology to buy its rival Cavium for about $6 billion

Alicia Cross
November 21, 2017

Marvell Technology Group and Cavium has entered into a definitive agreement, under which Marvell will acquire all outstanding shares of Cavium in a Dollars 6 billion deal.

Cavium's stock soared 7.4% in pre-market trading on the news, while Marvell shares climbed 1%.

Further, the merger will expand Marvell's existing portfolio of storage hardware, networking solutions and high-performance connectivity products with Cavium's portfolio of multi-core processing products, networking communications, storage connectivity and security solutions, to create a significant industry leader in technology infrastructure solutions.

The deal comes around a year and a half after Marvell found itself targeted by the activist hedge fund Starboard Value LP. The company intends to combine that tech with Cavium's data center processors and enterprise networking offerings. Cavium has strong server computing products that can help telecommunication carriers optimize their networks, which Broadcom doesn't have, Moorhead said in an email.

Marvell's offer of $84.15 - based on the stock's close on Friday - represents a premium of 11 percent to San Jose, California-based Cavium's close, according to a Reuters calculation.

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The deal is expected to close in mid-2018.

The most recent is a bid by Wi-Fi chipmaker Broadcom for rival Qualcomm for a whopping $103 billion in what could be one of the biggest technology deals ever.

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.

Marvell will offer $40 per share in cash and 2.1757 of its shares for each Cavium share.

The exchange ratio was based on a purchase price of $80 per share, using Marvell's undisturbed price prior to November 3, when media reports of the transaction first surfaced.

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