Marvell Technology to acquire Cavium for $6 billion

Here's What's Coming Up On Pre Market Prep For Nov. 20

Marvell Technology Group, a manufacturer of storage, networking, and processing chips, will purchase fellow fabless semiconductor firm Cavium for $6 billion. Instead of focusing Marvell's business efforts exclusively on chips that control hard drive disks, Murphy has switched gears to add more offerings in data center and wireless communication technology.

Shares of Marvell were down 0.8 percent to $20.14, while Cavium was up 7 percent at $81.14 in early trading.

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

Analysts say the new leadership is preparing a number of important new product launches for later this year after refreshing 25 products in 18 months. The potential deal came to light November 3 when a Wall Street Journal report said the companies were in "advanced" talks.

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Murphy will lead the combined company, and Syed Ali, Cavium co-founder and CEO, will be a strategic advisor as well as a member of Marvell's board of directors.

A buyout of Cavium would give a boost to the networking ambitions of Marvell, which has clients such as network giants Cisco and Juniper Networks.

The big acquisition deal in progress in the semiconductor space might be Broadcom's rejected bid to take over Qualcomm, but a pair of less-prominent names in the space have come to terms.

Under the deal, Marvell will offer $40.00 per share in cash and 2.1757 of its shares for each Cavium share. Intel now dominates the server market, but the combined Marvell-Cavium company will be better suited to take on the giant chipmaker than Cavium alone.

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