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Marvell Technology is buying chip maker Cavium in a $6-billion deal

Marvell Technology has bid about $6 billion for Cavium in a cash-and-stock deal that would create a chip maker to compete with Intel and other giants in the industry.

The potential deal extends a long-running consolidation for computer chip producers that are trying to grow so that they can better supply tech leaders such as Apple, Google and Samsung.

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Last week, Qualcomm rejected an unsolicited, $103-billion buyout from Broadcom, saying the bid was too low.

Qualcomm last year said it would buy NXP Semiconductors for $38 billion. That deal remains under regulatory review. Avago Technologies purchased Broadcom for $37 billion in 2016.

Under the proposed deal announced Monday, Cavium shareholders will get $40 per share and 2.1757 Marvell common shares for each Cavium share they own.

Cavium Inc. stockholders are expected to own about 25% of the combined company.

Marvell Chief Executive Matt Murphy would lead the combined company, with Cavium co-founder and CEO Syed Ali serving as a strategic advisor and board member.

Cavium makes chips for wired and wireless tech products and is prominent in networking technology. Marvell makes application-specific chips and integrated circuits for data storage. The combined company would be able to trim costs and offer a more robust package to potential customers.

The stock price of Cavium, based in San Jose, surged nearly 11% on Monday. Shares of Marvell Technology Group Ltd., which has its U.S. headquarters in Santa Clara, Calif., rose 6%.

UPDATES:

5 p.m.: This article has been updated with closing stock prices.

12:35 p.m.: This article was updated with additional details on the two chipmakers and morning stock gains.

This article was originally published at 4:45 a.m.

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