Marvell takes Cavium under its wing for $6 billion


— 4:18 PM on November 20, 2017

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. Marvell Technology Group, a manufacturer of storage, networking, and processing chips, will purchase fellow fabless semiconductor firm Cavium for $6 billion. Cavium is one of the early players in the still-developing ARM server CPU space, and its ThunderX and ThunderX2 SoCs with up to 54 cores have Intel's Xeon processors in their sights for certain applications. Marvell hopes the acquisition will position the company to better compete with Intel, Qualcomm, and Broadcom.

Marvell offered over $84 per share for Cavium, an 11% premium compared to the company's stock market value this past Friday afternoon. In the final deal, Cavium shareholders will receive $40 per share in cash and 2.1757 shares of Marvell stock. Marvell will fund the deal with cash on hand and $1.75 billion in debt financing.

Marvell reportedly sought to purchase Cavium in order to solidify a place in the network connectivity business, in the face of a semiconductor market that's shutting out smaller players. In an interview with Reuters, Marvell CEO Matthew Murphy said that the company has seen reduced demand for the chips it sells for use in PC hard drives. The company's chips are also used in networking equipment from heavyweights like Cisco and Juniper Networks, though the Marvell SoCs used in Google's Chromecast streaming devices are probably more familiar to most consumers.

Cavium is one of Microsoft's partners (along with Qualcomm) intent on bringing the software giant's Windows Server operating system to ARM processors. Cavium's ThunderX2 and rival Qualcomm's upcoming Centriq server chips have received a good deal of attention in light of promising benchmarks produced by users with engineering samples.

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