Santa Clara, CA-based Marvell aims to combine its HDD and SSD storage controllers, networking solutions and wireless connectivity products with San Jose-based Cavium’s multi-core processing, networking communications, storage connectivity and security solutions.
The combined product portfolios – targeting customers across the cloud data center, enterprise and service provider markets – will expand Marvell’s serviceable addressable market to more than $16 billion.
Recently, Qualcomm, the US-based semiconductor company, has rejected a $130 billion bid from Broadcom.
“Syed Ali has built an outstanding company, and I’m excited that he is joining the Board. I’m equally excited that Cavium’s Co-founder Raghib Hussain and Vice President of IC Engineering Anil Jain will also join my senior leadership team,” said Marvell CEO Matt Murphy.
Matt Murphy will lead the combined company. Marvell CFO Jean Hu, Cavium’s co-founder and COO Raghib Hussain and Cavium’s vice president of IC Engineering Anil Jain will be part of the new company.
Cavium co-founder and CEO Syed Ali said: “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.”
Syed Ali will continue with the combined company as a strategic advisor and will join Marvell’s Board of Directors.
The transaction is expected to generate at least $150 to $175 million of annual run-rate synergies within 18 months post close and to be significantly accretive to revenue growth, margins and non-GAAP EPS.
Marvell will pay Cavium shareholders $40 in cash and 2.1757 Marvell common shares for each share of Cavium common stock. Cavium shareholders are expected to own approximately 25 percent of the combined company on a pro forma basis.
Marvell aims to fund the cash consideration with a combination of cash on hand from the combined companies and $1.75 billion in debt financing. Marvell has obtained commitments consisting of an $850 million bridge loan commitment and a $900 million committed term loan from Goldman Sachs Bank USA and Bank of America Merrill Lynch.
Goldman Sachs served as the exclusive financial advisor to Marvell and Hogan Lovells US served as legal advisor. Qatalyst Partners and JP Morgan Securities served as financial advisors to Cavium and Skadden, Arps, Slate, Meagher & Flom served as legal advisor.