Marvell and Cavium do the deed, vow to breed infra-monster

Six billion bucks does the trick, now let's see what kind of kit they build together

The rumours were right: Marvell has formally announced it will buy Cavium, for around six billion US dollars, and plans to emerge as an “Infrastructure Solutions Powerhouse”.

Marvell has offered US$40, plus 2.1757 of its own shares, for each Cavium share. With Marvell scrip currently attracting orders at around $21 and Cavium shares at $84, the latter company's shareholders will end up ahead by about three dollars per share.

That's not a colossal premium, but news of the deal spiked both companies' share price, suggesting that markets like the combination.

Both companies issued the same canned statement, albeit on different letterhead.

The guts of the statement says:

The combined product portfolios provide the scale and breadth to deliver comprehensive end-to-end solutions for customers across the cloud data center, enterprise and service provider markets, and expands Marvell’s serviceable addressable market to more than $16 billion. This transaction also creates an R&D innovation engine to accelerate product development, positioning the company to meet today’s massive and growing demand for data storage, heterogeneous computing and high-speed connectivity.

Which sounds a lot like a “one-stop shop” strategy.

Cavium co-founder and CEO Syed Al will join Marvell's board, while other senior Cavium figures will take high-level executive positions once the acquisition closes.

Marvell's secured $1.75 billion in debt financing to make the deal possible, but will pay the remainder of the $6bn value with cash held by both companies.

Both companies said the deal will close in “mid-calendar 2018” and anticipate synergies will flow from their combination. It will be interesting to see what products develop, too, as the two companies' assets add up to potentially very interesting devices. ®




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