Santa Clara and San Jose, CA. Marvell Technology Group Ltd. and Cavium Inc. today announced a definitive agreement, unanimously approved by the boards of directors of both companies, under which Marvell will acquire all outstanding shares of Cavium common stock in exchange for consideration of $40.00 per share in cash and 2.1757 Marvell common shares for each Cavium share. Marvell said that on completion of the transaction, it will become a leader in infrastructure solutions with approximately $3.4 billion in annual revenue. The Wall Street Journal values the cash-and-stock deal at roughly $6 billion.
The transaction combines Marvell’s portfolio of HDD and SSD storage controllers, networking solutions, and wireless connectivity products with Cavium’s portfolio of multicore processing, networking communications, storage connectivity, and security solutions. The companies said 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, adding that the acquisition 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.
Marvell president and chief executive officer Matt Murphy will lead the combined company, and the leadership team will have representation from both companies, including Marvell’s current chief financial officer Jean Hu, Cavium’s cofounder and chief operating officer Raghib Hussain, and Cavium’s vice president of IC engineering Anil Jain. In addition, Cavium’s cfounder and chief executive officer, Syed Ali, will continue with the combined company as a strategic advisor and will join Marvell’s board of directors, along with two additional board members from Cavium’s board of directors, effective upon closing of the transaction.
“This is an exciting combination of two very complementary companies that together equal more than the sum of their parts,” said 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.”
He added that he is equally excited that Hussain and Jain will also join the senior leadership team. “Together, we all will be able to deliver immediate and long-term value to our customers, employees, and shareholders,” he said.
“Individually, our businesses are exceptionally strong, but together, we will be one of the few companies in the world capable of delivering such a comprehensive set of end-to-end solutions to our combined customer base,” said Ali. “Our potential is huge. We look forward to working closely with the Marvell team to ensure a smooth transition and to start unlocking the significant opportunities that our combination creates.”
The transaction is expected to close in mid-calendar 2018, subject to regulatory approval as well as other customary closing conditions, including the adoption by Cavium shareholders of the merger agreement and the approval by Marvell shareholders of the issuance of Marvell common shares in the transaction.