Chipmaker Marvell Technology Group Ltd said it would buy its rival Cavium Inc for about $6 billion in cash and stock.
According to experts, Marvell seeks to expand its business after the company’s founders stepped down under the pressure of activist investor Starboard Value LP.
The company makes chips for hard drives, but this market is losing demand as new technologies emerge.
If Cavium acquisition deal takes place, it will be the largest deal of Chief Executive Matthew Murphy, who took the top job a year ago. Cavium produces networking processors and is one of the companies trying to use ARM Holdings Plc technology to compete with Intel Corp. in the server microprocessor market. The deal will allow Marvel to get closer to its goal to rival the world's largest chipmaker with a 99% market share.
In 2017, Marvell shares went up by 46%, sending the company's market capitalization to $10 billion. Today, Western Digital Corp., Toshiba Corp. and Samsung Electronics Co. are among its customers.
