Marvell Technology to buy smaller rival Cavium

Semiconductor manufacturer Marvell Technology has announced that it will be acquiring U.S. chip maker Cavium in a deal worth $6bn. 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 acquisition of San Jose, Calif. -based Cavium is the biggest deal for Marvell CEO Matthew J. Murphy, who took the role previous year after an accounting scandal forced the resignation of his predecessor.

Another chipmaker making headlines is Broadcom, which offered to buy rival Qualcomm for $105 billion.

Marvell, which has been trying to diversify from its storage devices business, had come under pressure from Starboard Value a year ago, when the activist investor called the company undervalued.

Cavium produces network, security, server, and switching processors and systems.

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.

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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.

"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.

Intel now dominates the server market, but the combined Marvell-Cavium company will be better suited to take on the giant chipmaker than Cavium alone.

During the investigation, Starboard Value LP took a stake in Marvell and pushed for management changes and divestments, and in April 2016 Sutardja and his wife, President Weili Dai, who founded the company in 1995, stepped down.

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.

(Copyright © 2015. All Rights Reserved.)
 
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