Marvell Technology has confirmed an agreement to acquire Inphi for cash and shares to create a new semiconductor group worth USD 40 billion. As part of the deal, Marvell will move the headquarters of the company from Bermuda to the US.
The acquisition is expected to expand Marvell's addressable market and accelerate its growth prospects thanks to Inphi's leading high-speed data interconnect platform. This will help Marvell expand its foothold in the data centre market, which is growing rapidly due to the strong demand for bandwidth to fuel cloud services.
The merger brings together Marvell's storage, networking, processor and security portfolio with Inphi's electro-optics interconnect platform. This means the group can serve not only enterprise and industrial segments but also provide the connectivity products needed for data centre and telecom networks. Integration of the two groups is expected to generate USD 125 million in synergies within 18 months of closing and add to adjusted EPS for Marvell within one year.
Marvell will pay USD 66 in cash and 2.323 shares of stock for each Inphi share. That's equal to USD 162.3 per share, compared to Inphi's last closing price of USD 113.9, giving the company's equity a total value of around USD 8.2 billion. Upon closing this will give Marvell shareholders 83 percent of the combined company and Inphi stockholders 17 percent, and Inphi's CEO Ford Tamer will join Marvell's board.
Marvell is using cash on hand and debt financing from JP Morgan to finance the deal. Pending regulatory and shareholder approvals, the takeover should close in the second half of 2021.
Revenue growth of 92%
Marvell also announced that it expects to report revenues for its fiscal third quarter to October in line with its previous guidance of around USD 750 million. The full results will be released 03 December.
Inphi separately reported its own revenue for calendar Q3 rose 91.8 percent year-on-year to USD 180.7 million, driven by demand for cloud and telecom products and its acquisition of eSilicon in January. The company moved to an operating profit of USD 6.2 million, and the net loss reduced to USD 3.4 million in Q3 from USD 16.2 million a year ago.
