Marvell Technology to buy smaller rival Cavium

Allan Goodman
November 21, 2017

Instead of focusing Marvell's business efforts exclusively on chips that control hard drive disks, Murphy has switched gears to add more offerings in data center and wireless communication technology.

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.

"This is an exciting combination of two very complementary companies that together equal more than the sum of their parts", said Marvell President and Chief Executive Officer, Matt Murphy.

The transaction combines Marvell's portfolio of HDD and SSD storage controllers, networking solutions and wireless connectivity products with Cavium's portfolio of multi-core processing, networking communications, storage connectivity and security solutions.

Marvell, based in Hamilton, Bermuda, has its USA headquarters in Santa Clara. Syed Ali has built an outstanding company, and I'm excited that he is joining the Board. Chipmakers have combined at a record pace over the last two years trying to gain scale to better cope with rising costs and a shrinking customer list.

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The deal will lift Marvell's total potential market to more than US$12 billion and establish a more substantial research and development team to meet shifting needs in the massive industry of data storage, they said in a statement. In 2015 the company launched an internal investigation into its accounting practices and concluded that some revenue had been recognized prematurely.

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 Marvell transaction, which values Cavium at US$80 per share, is expected to close in the middle of 2018.

Marvell has obtained a $850 million bridge loan commitment and a $900 million committed term loan from Goldman Sachs Group Inc. and Bank of America Corp.

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