Marvell Technology Group Ltd. and Cavium, Inc. on Monday announced a definitive agreement 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.
The exchange ratio was based on a purchase price of $80 per share, using Marvell’s undisturbed price prior to November 3, when media reports of the transaction first surfaced. This represents a transaction value of approximately $6 billion. Cavium shareholders are expected to own approximately 25% of the combined company on a pro forma basis.
Upon completion of the transaction, Marvell will become a leader in infrastructure solutions with approximately $3.4 billion in annual revenue, the company stated.
The transaction combines Marvell’s portfolio of HDD and SSD storage controllers, networking solutions and high-performance wireless connectivity products with Cavium’s portfolio of multi-core processing, networking communications, storage connectivity and security solutions.
The combined product portfolios provide the scale and breadth to deliver what Marvell called “comprehensive end-to-end solutions for customers across the cloud data center, enterprise and service provider markets,” and expands Marvell’s serviceable addressable market to more than $16 billion, according to the company.
“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. “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.