Marvell Technology to buy Cavium in $6bn deal

Marvell Technology has agreed to buy Cavium in a deal valued at around $6bn.

Under the terms of the deal, which is expected to close in mid-2018, Marvell will pay $40 per share in cash and 2.1757 Marvell common shares for each Cavium share. Cavium shareholders will own approximately 25% of the combined company on a pro forma basis.

Marvell president and chief executive officer Matt Murphy said: "This is an exciting combination of two very complementary companies that together equal more than the sum of their parts.

"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."

Cavium co-founder and chief executive officer, Syed Ali, said: "Individually, our businesses are exceptionally strong, but together, we will be one of the few companies in the world capable of delivering such a comprehensive set of end-to-end solutions to our combined customer base.

"Our potential is huge. We look forward to working closely with the Marvell team to ensure a smooth transition and to start unlocking the significant opportunities that our combination creates."

The deal is expected to generate at least $150m to $175m of annual run-rate synergies within 18 months post close and to be significantly accretive to revenue growth, margins and non-GAAP earnings per share.

Marvell plans to fund the acquisition consideration with a combination of cash on hand from the combined companies and $1.75bn in debt financing. It has obtained an $850m bridge loan commitment and a $900m committed term loan from Goldman Sachs Bank USA and Bank of America Merrill Lynch.