Marvell Shares Tumble 30% With Plan to Buy Galileo

Communications chip maker Marvell Technology Group Ltd. said it would acquire Israeli routing and switching products maker Galileo Technology Ltd. for $1.85 billion in stock, sending Marvell shares plunging 30%. Marvell shares tumbled $24.69 to close at $57.06 on Nasdaq, cutting the value of the deal to about $1.85 billion from an original $2.7 billion. Investors may have been disappointed that Marvell itself was not bought out by a larger competitor--which, with the Galileo deal, is less likely, one analyst said. Also, investors have become increasingly skittish as Nasdaq has gone into bear-market territory. Galileo shares rose 92 cents to close at $31.81 on Nasdaq after touching a 12-month high of $38. Marvell makes mixed-signal and digital-signal processors that help speed data on the Internet and between computers. Galileo makes chips that are used in networking switches, along with controllers for networking computers together. While the proposed deal might make sense in terms of combining technologies, it would also make the new company a less attractive acquisition target. Marvell, whose integrated circuits enable high-speed data storage and transmission, would swap 0.674 share for each share of Galileo, or a total of 32.9 million Marvell shares.