Marvell Technology buys Cavium for $6 billion

Report: Chipmaker Marvell to buy rival firm Cavium for around $6 billion

Chipmaker Marvell Technology Group (MRVL) on Monday officially announced plans to buy industry peer Cavium (CAVM) in a deal worth $6 billion, creating what it called an "infrastructure solutions powerhouse". 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.

Marvell will pay Cavium shareholders $40 per share in cash, and 2.1757 Marvell common shares for each unit of Cavium stock, according to a release.

"Cavium helps diversify (Marvell's) business in the networking space", Ives said.

"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", Cavium Co-founder and Chief Executive Officer, Syed Ali, stated.

"This is an exciting combination of two very complementary companies that together equal more than the sum of their parts", Marvell president and CEO Matt Murphy said in the release.

Marvell, based in Santa Clara, California, is perhaps best known for making the storage controllers in HDD and SSD memory drives. Marvell's Murphy will head up the new company. On Monday, Nov. 20, 2017, Marvell said it would acquire San Jose-based Cavium for $6 billion. In 2015 the company launched an internal investigation into its accounting practices and concluded that some revenue had been recognized prematurely. The exchange ratio was based on a purchase price of $80 per share, which is a 21% premium to Cavium's closing price on November 2, before media reports about the transaction first surfaced.

Within the deal, Marvell will purchase all of Cavium's outstanding shares, with the acquisition having been approved unanimously by the Board of Directors of both companies.

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