Marvell Technology Group, a major semiconductor company, announced Oct. 29 it will acquire Inphi, a competitor based in Santa Clara with significant operations in Thousand Oaks, in a cash and stock deal worth about $8 billion.
Under the agreement, Marvell will pay Inphi shareholders $66 for each share of Inphi stock, along with 2.323 shares of stock of the combined company. Once the transaction is complete, Marvell shareholders will own 83% of the combined company while Inphi stockholders will own approximately 17%. The companies expect the deal to close sometime in the second half of 2021.
Shares of Inphi soared on the news, going from a closing price of $110.97 on Oct. 28 to $140.60 on Oct. 29, a 26.7% jump in one day. The Marvell deal values Inphi at $154.75 per share, according to Marvell’s closing price of $38.21 on Oct. 29.
The combined company will aim to position itself as the top in market for both cloud datacenters as well as 5G technology.
“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,” Ford Tamer, president and CEO of Inphi, said in a news release. “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.”
Upon closing, Tamer will join Marvell’s board of directors.
Marvell is technically based in Bermuda. It plans to form a new U.S.-based holding company for the combined company.
The deal will create a U.S. semiconductor powerhouse with an enterprise value of approximately $40 billion.
Inphi also released its third quarter earnings on Oct. 29, showcasing record revenue growth.
The company generated $180.7 million in the third quarter of 2020, up nearly 91% from the third quarter of 2019.
Through nine months, Inphi has generated $495.4 million, compared to just $262.7 million through the first nine months of 2019.
Net loss for the most recent quarter was $3.4 million, or 7 cents per share, down from a loss of $16.2 million, or 36 cents per share, a year earlier.
Inphi said the growth in revenue is due to a higher demand for its cloud and telecommunications products as well as the inclusion of eSilicon revenues following the acquisition of that company, which closed Jan. 10.