Tue, Nov 21, 2017 - Page 11 News List

Marvell has agreed to buy Cavium Inc, source says

EYEING INTEL:Cavium is one of several firms trying to use ARM Holdings PLC technology to break Intel Corp’s lucrative hold on the market for server microprocessors

Bloomberg

Marvell Technology Group Ltd, a chipmaker looking to build itself a future outside of a declining area of the market, has agreed to buy Cavium Inc for about US$6 billion, a person familiar with the transaction said.

The deal would involve a mix of cash and stock, said the person, who asked to not be identified because the transaction is still private.

The companies aimed to announce the details as soon as yesterday, the person said.

Marvell is trying to remake itself after a corporate scandal which led to the ouster of its founders under pressure from activist investor Starboard Value LP.

DATA STORAGE

The company has specialized in chips that control hard disk drives, a market which is no longer growing as new technology begins to take over data storage.

The deal to purchase San Jose, California-based Cavium would be the biggest by Marvell chief executive Matthew Murphy, who took the role last year.

Cavium, a maker of network processors, is one of several companies trying to use ARM Holdings PLC technology to break Intel Corp’s lucrative hold on the server microprocessor market.

That effort is still in its early stages and the world’s largest chipmaker has a more than 99 percent market share.

Marvell did not immediately respond to requests for comment outside normal business hours. Cavium declined to comment.

The deal is yet another move toward consolidating the US$300 billion semiconductor industry.

Chipmakers have combined at a record pace over the past two years trying to gain scale to better cope with rising costs and a shrinking customer list.

PROPOSED DEAL

In the biggest proposed deal so far, Broadcom Ltd has offered to buy Qualcomm Inc for more than US$100 billion.

Marvell shares have climbed 46 percent this year, giving the firm a market value of about US$10 billion.

Its customers include Western Digital Corp, Toshiba Corp and Samsung Electronics Co, according to Bloomberg supply-chain analysis.

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