- Infrastructure semiconductor solutions leader Marvell Technology Group Ltd. (NASDAQ: MRVL) and high-speed data movement leader Inphi Corporation (NASDAQ: IPHI) announced a definitive agreement under which Marvell will buy Inphi in a cash and stock transaction. These are the details.
Infrastructure semiconductor solutions leader Marvell Technology Group Ltd. (NASDAQ: MRVL) and high-speed data movement leader Inphi Corporation (NASDAQ: IPHI) announced a definitive agreement, unanimously approved by the boards of directors of both companies under which Marvell will buy Inphi in a cash and stock transaction. And in conjunction with the transaction, Marvell intends to reorganize so that the combined company will be domiciled in the United States, creating a U.S. semiconductor powerhouse with an enterprise value of approximately $40 billion.
What does Inphi do? Inphi built a leading high-speed data interconnect platform that is uniquely suited to meet the insatiable demand for increased bandwidth and low power for the cloud data centers and global networks of the future. And Inphi’s high-speed electro-optics portfolio provides the connectivity fabric for cloud data centers and wired and wireless carrier networks just as Marvell’s copper physical layer portfolio does for enterprise and future in-vehicle networks. By combining Marvell’s storage, networking, processor, and security portfolio with Inphi’s leading electro-optics interconnect platform will position the combined company for end-to-end technology leadership in data infrastructure. And this complementary transaction expands Marvell’s addressable market, strengthens customer base, and accelerates Marvell’s leadership in hyperscale cloud data centers and 5G wireless infrastructure.
The combined scale will provide more resources and capabilities to continue to invest and better manage the rapidly ramping process technology costs. And the transaction is expected to generate annual run-rate synergies of $125 million to be realized within 18 months after the transaction closes and is expected to become accretive to Marvell’s non-GAAP earnings per share by the end of the first year after the transaction closes.
Upon the closing of the deal, Inphi’s President and CEO Ford Tamer will join Marvell’s Board of Directors. And under the terms of the definitive agreement, the transaction consideration will consist of $66 in cash and 2.323 shares of stock of the combined company for each Inphi share. When the transaction closes, Marvell shareholders will own approximately 83% of the combined company and Inphi stockholders will own approximately 17% of the combined company.
Marvell plans to finance the transaction with cash on hand and additional financing. And Marvell has obtained debt financing commitments from JPMorgan Chase Bank.
The deal is not subject to any financing condition and is expected to close by the second half of calendar 2021, subject to the approval of Marvell shareholders and Inphi stockholders and the satisfaction of customary closing conditions, including applicable regulatory approvals.
J.P. Morgan Securities LLC served as the exclusive financial advisor to Marvell and also provided committed financing for the transaction and Hogan Lovells US LLP served as legal advisor. And Qatalyst Partners LP served as exclusive financial advisor to Inphi and Pillsbury Winthrop Shaw Pittman LLP served as legal advisor.
Preliminary Third Fiscal Quarter 2021 Results
Based on preliminary financial information, Marvell is expecting its third quarter revenue to be in the range of $750 million +/- 2%. And further information regarding third fiscal quarter results will be released on December 3, 2020 at 1:45 p.m. Pacific Time.
“Our acquisition of Inphi will fuel Marvell’s leadership in the cloud and extend our 5G position over the next decade. Inphi’s technologies are at the heart of cloud data center networks and they continue to extend their leadership with innovative new products, including 400G data center interconnect optical modules, which leverage their unique silicon photonics and DSP technologies. We believe that Inphi’s growing presence with cloud customers will also lead to additional opportunities for Marvell’s DPU and ASIC products.”
— Matt Murphy, president and CEO of Marvell
“Marvell and Inphi share a vision to enable the world’s data infrastructure and we have both transformed our respective businesses to benefit from the strong secular growth expected in the cloud data center and 5G wireless markets. Combining with Marvell significantly increases our scale, accelerates our access to the next generations of process technology, and opens up new opportunities in 5G connectivity.”
— Ford Tamer, President and CEO of Inphi