Marvell Technology has agreed to buy Cavium Networks for about United States dollars 6 billion in a cash and stock deal, Bloomberg reported, citing sources familiar with the transaction, who added the deal could be announced very soon.
The potential deal extends a long-running consolidation for computer chip producers which are trying to keep up with tech leaders like Apple and Google. While Qualcomm rejected the approach, Broadcom is expected to pursue a proxy battle. Avago Technologies purchased Broadcom for $37 billion in 2016.
(CAVM) announced a definitive agreement, under which Marvell will acquire all outstanding shares of Cavium common stock in exchange for consideration of $40.00 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.
Shares of Marvell were up 1 percent while shares of Cavium were up 7.7 percent to $81.70 in premarket trading on Monday.
Hamilton, Bermuda-based Marvell makes chips for storage devices while San Jose, California-based Cavium builds network equipment.
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". Shares of Marvell Technology Group Ltd., which has its USA headquarters in Santa Clara, California, fell slightly.