In a recent move witnessed across the semiconductor industry, Marvell Technology Group Limited, a key producer of consumer semiconductor items, is expected to buy Cavium Incorporation, a major semiconductor firm, for nearly USD 6 billion. Experts claim that the acquisition deal will help the former to expand its business across the network equipment sector in the years ahead. As per reliable sources, the purchase agreement has estimated the stock price of Cavium at USD 80 per share at a premium of nearly 17%, which is more than the share price of the latter recorded by the Wall Street Journal in early November. In fact, the increase of over 10% was observed in the share prices this year as compared to last year’s stock costs.
According to authentic sources, Marvell has an industry capitalization of USD 10 billion, while Cavium has a market capitalization of nearly USD 5.2 billion. Last year, Marvell deployed a restructuring strategy, curtailing jobs and exploring areas such as wireless communication and data centers. On the other hand, Cavium purchased QLogic Corporation, a key producer of networking servers and application acceleration devices, for nearly USD 1.3 billion.
Analysts claim that the proportion of mergers & acquisitions across the semiconductor & chipmaking industry has experienced a rise in the recent years. Earlier in November, Broadcom Limited had made a purchase bid of approximately USD 103 billion to acquire Qualcomm Inc., which incidentally, had been rejected by the latter, on the grounds of the fact that the offer undervalued the firm and that the organization could have to face regulatory hitches.
The slew of mergers & acquisitions taking place across the semiconductor & chipmaking industry are anticipated to considerably increase the market growth potential amidst tough competition, claim experts, which has reduced semiconductor chip costs and the overall valuation of this business space.