Marvell Technology to buy smaller rival Cavium for $6bn

Report: Chipmaker Marvell to buy rival firm Cavium for around $6 billion

Further, the merger will expand Marvell's existing portfolio of storage hardware, networking solutions and high-performance connectivity products with Cavium's portfolio of multi-core processing products, networking communications, storage connectivity and security solutions, to create a significant industry leader in technology infrastructure solutions.

Marvell and Cavium each have complementary product sets spanning enterprise, cloud data center and service provider networks.

That move was followed by the appointment of Matt Murphy as the company's new chief executive officer.

The agreement will see a part-cash, part-share transaction, with approximately $40 and 2.2 Marvell common shares traded for each Cavium share.

The chipmaker plans to fund the deal with a combination of cash on hand from the combined companies and $1.75 billion in debt financing, the company said.

Marvell, based in Hamilton, Bermuda, has its US headquarters in Santa Clara.

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. Chipmakers have combined at a record pace over the last two years trying to gain scale to better cope with rising costs and a shrinking customer list. Earlier this month, chipmaker Qualcomm Inc rejected rival Broadcom Ltd's $103 billion takeover bid, one of the biggest ever in technology dealmaking, saying the offer undervalued the company and would face regulatory hurdles. In 2015 the company launched an internal investigation into its accounting practices and concluded that some revenue had been recognized prematurely.

Marvell's offer of $84.15 - based on the stock's close on Friday - represents a premium of 11 percent to San Jose, California-based Cavium's close, according to a Reuters calculation.

Within the deal, Marvell will purchase all of Cavium's outstanding shares, with the acquisition having been approved unanimously by the Board of Directors of both companies.

Marvell has obtained a $850 million bridge loan commitment and a $900 million committed term loan from Goldman Sachs Group Inc. and Bank of America Corp.

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