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Marvell Technology makes move on multibillion-dollar Cavium acquisition

Marvell Technology makes move on multibillion-dollar Cavium acquisition

The deal is expected to allow Marvell to diversify away from its traditional storage devices business

Chipmaker, Marvell Technology Group, has agreed to acquire smaller peer, Cavium, for around US$6 billion, as it seeks to expand in the networking equipment sector.

The deal is set to allow Marvell to diversify away from its traditional storage devices business following an agreement with Starboard Value LP last year to accept three new directors nominated by the activist hedge fund to its board.

Marvell announced its cash-and-stock acquisition of Cavium on 20 November. 

Marvell CEO, Matt Murphy, who took the reins of the chipmaker last year, has embarked on a restructuring of the company, slashing jobs and seeking to add offerings in areas such as data centers and wireless communications.

Based in San Jose, California, Cavium produces network, security, server, and switching processors and systems. Last year it acquired QLogic Corp, a manufacturer of interface devices for storage area networks, for about US$1.3 billion.

Marvell has a market capitalisation of US$10 billion while Cavium, whose shares have risen more than 10 per cent since the Wall Street Journal reported earlier this month that the companies were in advanced talks, has a market capitalisation of US$5.2 billion.

Mergers and acquisitions activity in the semiconductor sector has been picking up. Earlier this month, chipmaker, Qualcomm, rejected rival Broadcom’s US$103 billion takeover bid, one of the biggest ever in technology dealmaking, saying the offer undervalued the company and would face regulatory hurdles.

(Reporting by Liana B. Baker in New York; Editing by Cynthia Osterman)


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