Marvell Technology has bid about $6 billion for Cavium in a cash-and-stock deal that would create a chip maker to compete with Intel and other giants in the industry. The potential deal extends a long-running consolidation for computer chip producers which are trying to grow so that they can better supply tech leaders like Apple, Google and Samsung.
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Last week, Qualcomm rejected an unsolicited, $103 billion buyout from Broadcom, saying the bid was too low. Qualcomm last year said it would buy NXP Semiconductors for $38 billion. That deal remains under regulatory review. Avago Technologies purchased Broadcom for $37 billion in 2016. Under the proposed deal announced Monday, Cavium shareholders will get $40 per share and 2.1757 Marvell common shares for each Cavium share they own.
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Cavium stockholders are expected to own about 25 percent of the combined company. Marvell CEO Matt Murphy will lead the combined company, with Cavium co-founder and CEO Syed Ali serving as a strategic adviser and board member. Cavium makes chips for wired and wireless tech products and is prominent in networking technology. Marvell makes application-specific chips and integrated circuits for data storage. The combined company would be able to trim costs and offer a more robust package to potential customers.
Shares of Cavium, based in San Jose, California, surged 6 percent in premarket trading. Shares of Marvell Technology Group Ltd., which has its U.S. headquarters in Santa Clara, California, fell slightly.
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