Marvell Technology to acquire Cavium for $6 billion

Marvell Technology Group Ltd. (NASDAQ: MRVL) has entered into an agreement with Cavium Inc. (NASDAQ: CAVM) which Marvell will acquire Cavium for approximately $6 billion to create an infrastructure solutions powerhouse. Cavium shares jumped 7.4 percent after Monday’s open.

Under the agreement, Marvell will offer $40.00 per share and 2.1757 of its shares for Cavium’s shares.

Marvell’s offer of $84.15- based on the stock’s close on Friday – represents a premium of 11 percent to Cavium’s close, according to a Reuters.

The acquisition will expands Marvell’s portfolio and combine it with Cavium’s portfolio. The two will be able to deliver “comprehensive end-to-end solutions” for customers across cloud data center, enterprise and service provider markets, and Marvell’s serviceable market.

Marvell also says that it’ll create an R&D innovation engine which will help bolster the company’s position as the demands for data storage is continuously growing.

"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.

"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 Cavium Co-founder and Chief Executive Officer, Syed Ali.

Marvell intends to fund the acquisition from cash on hand from the combined companies and $1.75 billion in debt financing.

The transaction is expected to close around the middle of 2018.

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