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Marvell Technology to buy Cavium for US$6b
[NEW YORK] Digital storage company Marvell Technology Group announced Monday it will acquire chipmaker Cavium for about US$6 billion, broadening the companies' combined product slate to boost competitiveness against larger rivals.
The cash and stock deal will combine the two companies' offerings "to deliver comprehensive end-to-end solutions for customers across the cloud data center, enterprise and service provider markets," the companies said.
The deal will lift Marvell's total potential market to more than US$12 billion and establish a more substantial research and development team to meet shifting needs in the massive industry of data storage, they said in a statement.
"This is an exciting combination of two very complementary companies that together equal more than the sum of their parts," said Marvell chief executive Matt Murphy.
Marvell had revenues last year of US$2.3 billion, while Cavium had sales of US$603.3 million.
The transaction comes a week after Qualcomm rejected a US$130 billion bid from rival computer chip maker Broadcom in a proposed mega-takeover that would consolidate two major players in the booming sector fueled by growth in smartphones and other connected devices.
Broadcom has said it remains committed to the deal.
The Marvell transaction, which values Cavium at US$80 per share, is expected to close in the middle of 2018.
Shares of Cavium surged 8.6 per cent to US$82.35 in pre-market trading, while Marvell advanced 2.9 per cent to US$20.87.