Marvell to acquire Cavium for $6 billion

Marvell Technology Group Ltd., which is a leading supplier of HDD and SSD storage controllers along with wireless and Ethernet components, agreed to acquire Cavium for $40.00 per share in cash and 2.1757 Marvell common shares for each Cavium share, representing a transaction value of $6 billion. Current Cavium shareholders would own approximately 25% of the combined company.

Cavium, which is based in San Jose, California, offers a portfolio of multi-core processing, networking communications, storage connectivity and security silicon solutions. For Q3 2017, Cavium reported net revenue of $252.0 million, a 4.1% sequential increase from the $242.1 million reported in the second quarter of 2017, and a GAAP net loss of $6.2 million, or ($0.09) per diluted share.

Marvell,  which is based in nearby Santa Clara, California but has its corporate headquarters in Bermuda, was founded in 1995 and has over 5,000 employees and over 9,000 patents. For its most recent fiscal quarter, Marvell reported sales of $605 million, and GAAP net income from continuing operations of $135 million, or $0.26 per share. The company underwent a restructuring in October 2016.

Marvell said the acquisition will give it scale and breadth to deliver end-to-end solutions across the cloud data center, enterprise and service provider markets.

“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. “This combination expands and diversifies our revenue base and end markets, and enables us to deliver a broader set of differentiated solutions to our customers. Syed Ali has built an outstanding company, and I’m excited that he is joining the Board. I’m equally excited that Cavium’s Co-founder Raghib Hussain and Vice President of IC Engineering Anil Jain will also join my senior leadership team. Together, we all will be able to deliver immediate and longterm value to our customers, employees and shareholders.”

The companies expect at least $150 to $175 million of annual run-rate synergies within 18 months post close.