Chip making moguls Marvell technology are all set to announce the acquisition of rivals Cavium on Monday (27 Nov). The deal was sealed by Marvell at a staggering USD 6 billion in a bid to give themselves a competitive edge in the semiconductor market. Company sources state that Marvell plans to fund the deal with a combination of cash and USD 1.75 billion in debt financing.
GBH Insights analyst Daniel Ives stated that:
With Marvell facing secular challenges on its core chip business, this acquisition is a smart strategic move which puts the company in a stronger competitive position for the coming years.
Analysts also state that the new leadership is preparing a number of important new product launches for later this year after refreshing 25 products in 18 months.
The deal is CEO Matt Murphy’s first acquisition at the company. He explained that:
This is an exciting combination of two very complementary companies that together equal more than the sum of their parts.
A buyout of Cavium is likely to boost the networking ambitions of Marvell, which has clients like Cisco Systems and Juniper Networks.
In the last two years, the semiconductors and chip-making business have witnessed a series of M&A deals. Marvell’s acquisition of Cavium indicates that the former is trying to expand its wireless connectivity business in a rapidly consolidating semiconductor industry. It will be interesting to see if more deals of this kind are announced as the year ends.