Marvell to buy Inphi in $10bn chip deal

January 2021 | DEALFRONT | MERGERS & ACQUISITIONS

Financier Worldwide Magazine

January 2021 Issue

Chip manufacturer Marvell Technology Group Ltd has agreed to buy rival Inphi Corp in a $10bn cash-and-stock deal aimed at broadening Marvell’s footprint in data centres and 5G network infrastructure.

Under the terms of the deal, the transaction consideration will consist of $66 in cash and 2.323 shares of stock of the combined company for each Inphi share held. Upon closing of the transaction, Marvell shareholders will own approximately 83 percent of the combined company and Inphi stockholders will own the remaining 17 percent.

Marvell intends to finance the transaction with cash on hand, and additional financing. The company has obtained around $4bn in debt financing commitments from JPMorgan Chase Bank.

The transaction is not subject to any financing condition and is expected to close by the second half of 2021, subject to the approval of Marvell shareholders and Inphi stockholders and the satisfaction of customary closing conditions, including applicable regulatory approvals.

Marvell is currently headquartered in Silicon Valley, however it is domiciled in Bermuda. Following completion of the transaction, both Marvell and Inphi will become subsidiaries of a new US-domiciled holding company. The combined company is expected to have an enterprise value of about $40bn.

The amalgamation of Marvell’s storage, networking, processor and security portfolio, with Inphi’s electro-optics interconnect platform, will ensure the company is well-placed when it comes to end-to-end technology in data infrastructure. The combined company will be positioned to serve the data-driven world, addressing high growth and attractive end markets, most notably cloud data centres and 5G.

The transaction is expected to generate annual run-rate synergies of $125m to be realised within 18 months after closing, and accretive to Marvell’s non-GAAP earnings per share by the end of the first year

Upon closing, Ford Tamer, president and chief executive of Inphi, will join Marvell’s board of directors.

“Our acquisition of Inphi will fuel Marvell’s leadership in the cloud and extend our 5G position over the next decade,” said Matt Murphy, president and chief executive of Marvell. “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.”

“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,” said Mr Tamer. “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.”

The deal comes amid a flurry of tie-ups in the semiconductor industry this year. Advanced Micro Devices Inc on Tuesday said it would buy Xilinx Inc in a $35bn deal, following Nvida Corp’s $40bn purchase of SoftBank Group Corp’s Arm Ltd and Analog Devices Inc’s $21bn acquisition of Maxim Integrated Products.

Inphi, which was founded in 2000, has steadily increased its visibility by offering high-speed analogue, DSP and optical semiconductor solutions for the cloud and service provider communication markets. It has also completed a number of notable acquisitions, including the purchase of Cortina Systems to gain its high-speed interconnect and optical transport product lines.

Mr Murphy expects Inphi’s growing presence with cloud customers, which include Amazon, Microsoft and Google, to also lead to additional opportunities for Marvell’s data processing unit and its application specific integrated circuit products.

Richard Summerfield