Marvell Technology Group Ltd., a chipmaker looking to build itself a future outside of a declining area of the market, agreed to buy Cavium Inc. for about $6 billion, a person familiar with the transaction said.
The deal will involve a mix of cash and stock, said the person who asked to not be identified because the transaction is still private. The companies aim to announce the details as soon as Monday, the person said. Reuters earlier reported the tie up between the chipmakers.
Marvell is trying to remake itself after a corporate scandal which led to the ouster of its founders under pressure from activist investor Starboard Value LP. The company has specialized in chips that control hard disk drives, a market which is no longer growing as new technology begins to take over data storage.
San Jose, California-based Cavium would be the biggest deal by Marvell Chief Executive Officer Matthew J. Murphy who took the role last year. Cavium, a maker of network processors, is one of several companies trying to use ARM Holdings Plc technology to break Intel Corp.’s lucrative hold on the server microprocessor market. That effort is still in the early stages and the world’s largest chipmaker has more than 99 percent market share.
Marvell and Cavium didn’t immediately respond to phone calls and emails outside normal business hours seeking comment on the deal.
The deal is yet another move toward consolidating the $300-billion semiconductor industry. 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. In the biggest proposed deal so far, Broadcom Ltd. has offered to buy Qualcomm Inc. for more than $100 billion.
Shares of Marvell have jumped 46 percent this year, giving the company a market value of about $10 billion. Its customers include Western Digital Corp., Toshiba Corp. and Samsung Electronics Co., according to Bloomberg supply chain analysis.