SANTA CLARA, Calif. and
SAN JOSE, Calif., Nov. 20, 2017 /PRNewswire/ -- Marvell Technology
Group Ltd. (NASDAQ: MRVL) and Cavium, Inc. (NASDAQ: CAVM) today
announced a definitive agreement, unanimously approved by the
boards of directors of both companies, under which Marvell will
acquire all outstanding shares of Cavium common stock in exchange
for consideration of $40.00 per share
in cash and 2.1757 Marvell common shares for each Cavium share.
Upon completion of the transaction, Marvell will become a leader in
infrastructure solutions with approximately $3.4 billion1 in annual revenue.
The transaction combines Marvell's portfolio of leading HDD and
SSD storage controllers, networking solutions and high-performance
wireless connectivity products with Cavium's portfolio of leading
multi-core processing, networking communications, storage
connectivity and security solutions. The combined product
portfolios provide the scale and breadth to deliver comprehensive
end-to-end solutions for customers across the cloud data center,
enterprise and service provider markets, and expands Marvell's
serviceable addressable market to more than $16 billion. This transaction also creates an
R&D innovation engine to accelerate product development,
positioning the company to meet today's massive and growing demand
for data storage, heterogeneous computing and high-speed
connectivity.
"This is an exciting combination of two very complementary
companies that together equal more than the sum of their parts,"
said Marvell President and Chief Executive Officer, Matt Murphy. "This combination expands and
diversifies our revenue base and end markets, and enables us to
deliver a broader set of differentiated solutions to our customers.
Syed Ali has built an outstanding
company, and I'm excited that he is joining the Board. I'm equally
excited that Cavium's Co-founder Raghib
Hussain and Vice President of IC Engineering Anil Jain will
also join my senior leadership team. Together, we all will be able
to deliver immediate and long-term value to our customers,
employees and shareholders."
"Individually, our businesses are exceptionally strong, but
together, we will be one of the few companies in the world capable
of delivering such a comprehensive set of end-to-end solutions to
our combined customer base," said Cavium Co-founder and Chief
Executive Officer, Syed Ali. "Our
potential is huge. We look forward to working closely with the
Marvell team to ensure a smooth transition and to start unlocking
the significant opportunities that our combination creates."
The transaction is expected to generate at least $150 to $175 million of annual run-rate synergies
within 18 months post close and to be significantly accretive to
revenue growth, margins and non-GAAP EPS.
Transaction Structure and Terms
Under the terms of
the definitive agreement, Marvell will pay Cavium shareholders
$40.00 in cash and 2.1757 Marvell
common shares for each share of Cavium common stock. The exchange
ratio was based on a purchase price of $80 per share, using Marvell's undisturbed price
prior to November 3, when media
reports of the transaction first surfaced. This represents a
transaction value of approximately $6
billion. Cavium shareholders are expected to own
approximately 25% of the combined company on a pro forma basis.
Marvell intends to fund the cash consideration with a
combination of cash on hand from the combined companies and
$1.75 billion in debt financing.
Marvell has obtained commitments consisting of an $850 million bridge loan commitment and a
$900 million committed term loan from
Goldman Sachs Bank USA and Bank of
America Merrill Lynch, in each case, subject to customary terms and
conditions. The transaction is not subject to any financing
condition.
The transaction is expected to close in mid-calendar 2018,
subject to regulatory approval as well as other customary closing
conditions, including the adoption by Cavium shareholders of the
merger agreement and the approval by Marvell shareholders of the
issuance of Marvell common shares in the transaction.
Management and Board of Directors
Matt Murphy will lead the combined company, and
the leadership team will have strong representation from both
companies, including Marvell's current Chief Financial Officer
Jean Hu, Cavium's Co-founder and
Chief Operating Officer Raghib
Hussain and Cavium's Vice President of IC Engineering Anil
Jain. In addition, Cavium's Co-founder and Chief Executive Officer,
Syed Ali, will continue with the
combined company as a strategic advisor and will join Marvell's
Board of Directors, along with two additional board members from
Cavium's Board of Directors, effective upon closing of the
transaction.
Advisors
Goldman Sachs & Co. LLC served as the
exclusive financial advisor to Marvell and Hogan Lovells US LLP
served as legal advisor. Qatalyst Partners LP and J.P. Morgan
Securities LLC served as financial advisors to Cavium and Skadden,
Arps, Slate, Meagher & Flom LLP served as legal advisor.
Marvell Preliminary Third Fiscal Quarter Results
Based on preliminary financial information, Marvell expects revenue
of $610 to $620 million and non-GAAP
earnings per share to be between $0.32 and
$0.34, above the mid-point of guidance provided on
August 24, 2017. Further information
regarding third fiscal quarter results will be released on
November 28, 2017 at 1:45 p.m. Pacific Time.
Transaction Website
For more information, investors
are encouraged to visit
http://MarvellCavium.transactionannouncement.com, which will be
used by Marvell and Cavium to disclose information about the
transaction and comply with Regulation FD.
Call/Webcast to Discuss Transaction
Interested
parties may join a conference call Monday,
November 20, 2017 at 5:00 a.m.
Pacific Time to discuss the transaction by dialing 1 (866)
547-1509 in the U.S. or +1 (920) 663-6208 internationally, with the
conference ID 6386325. A webcast of the call can be accessed by
visiting Marvell's investor relations website. A replay will be
available until December 4, 2017 by
dialing 1 (800) 585-8367, replay ID 6386325.
About Marvell
Marvell first revolutionized the
digital storage industry by moving information at speeds never
thought possible. Today, that same breakthrough innovation remains
at the heart of the company's storage, networking, and connectivity
solutions. With leading intellectual property and deep system-level
knowledge, Marvell's semiconductor solutions continue to transform
the enterprise, cloud, automotive, industrial, and consumer
markets. To learn more, visit: www.marvell.com.
About Cavium
Cavium, Inc., offers a broad
portfolio of infrastructure solutions for compute, security,
storage, switching, connectivity and baseband processing. Cavium's
highly integrated multi-core SoC products deliver software
compatible solutions across low to high performance points enabling
secure and intelligent functionality in Enterprise, Data Center and
Service Provider Equipment. Cavium processors and solutions are
supported by an extensive ecosystem of operating systems, tools,
application stacks, hardware-reference designs and other products.
Cavium is headquartered in San Jose,
CA with design centers in California, Massachusetts, India, Israel, China
and Taiwan. For more information,
please visit: http://www.cavium.com.
Additional Information and Where to Find It
This
document relates to a proposed transaction between Marvell and
Cavium. This document does not constitute an offer to sell or
exchange, or the solicitation of an offer to buy or exchange, any
securities, nor shall there be any sale of securities in any
jurisdiction in which such offer, sale or exchange would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. Marvell intends to file a
registration statement on Form S-4 with the SEC, which will include
a document that serves as a prospectus of Marvell and a joint proxy
statement of Cavium and Marvell referred to as a joint proxy
statement/prospectus. A joint proxy statement/prospectus will be
sent to all Cavium stockholders and all Marvell shareholders. Each
party also will file other documents regarding the proposed
transaction with the SEC. Before making any voting decision,
investors and security holders of Cavium and investors and security
holders of Marvell are urged to read the registration statement,
the joint proxy statement/prospectus and all other relevant
documents filed or that will be filed with the SEC in connection
with the proposed transaction as they become available because they
will contain important information about the proposed
transaction.
Investors and security holders will be able to obtain free
copies of the registration statement, the joint proxy
statement/prospectus and all other relevant documents filed or that
will be filed with the SEC by Marvell or Cavium through the website
maintained by the SEC at www.sec.gov.
The documents filed by Marvell with the SEC also may be obtained
free of charge at Marvell's website at www.marvell.com or upon
written request to Marvell at 5488 Marvell Lane, Santa Clara, CA 95054.
The documents filed by Cavium with the SEC also may be obtained
free of charge at Cavium's website at www.cavium.com or upon
written request to 2315 North First Street, San Jose, CA 95131.
For more information, investors are encouraged to visit
http://MarvellCavium.transactionannouncement.com.
Marvell, Cavium and their respective directors and executive
officers may be deemed to be participants in the solicitation of
proxies from Cavium's stockholders and from Marvell's shareholders
in connection with the proposed transaction. Information about
Cavium's directors and executive officers and their ownership of
Cavium's common stock is set forth in Cavium's proxy statement for
its 2017 Annual Meeting of Stockholders on Schedule 14A filed with
the SEC on April 27, 2017. To the
extent that holdings of Cavium's securities have changed since the
amounts printed in Cavium's proxy statement, such changes have been
or will be reflected on Statements of Change in Ownership on Form 4
filed with the SEC. Information about Marvell's directors and
executive officers is set forth in Marvell's proxy statement for
its 2017 Annual Meeting of Shareholders on Schedule 14A filed with
the SEC on May 3, 2017. Additional
information regarding the interests of those persons and other
persons who may be deemed participants in the proposed transaction
may be obtained by reading the proxy statement/prospectus regarding
the proposed transaction when it becomes available. You may obtain
free copies of these documents as described in the preceding
paragraph.
Cautionary Statement Regarding Forward Looking
Statements
This document contains certain forward-looking
statements within the meaning of the federal securities laws with
respect to the proposed transaction between Marvell and Cavium,
including statements regarding the benefits of the transaction, the
anticipated timing of the transaction and the products and markets
of each company. These forward-looking statements generally are
identified by the words "believe," "project," "expect,"
"anticipate," "estimate," "intend," "strategy," "future,"
"opportunity," "plan," "may," "should," "will," "would," "will be,"
"will continue," "will likely result," and similar expressions.
Forward-looking statements are predictions, projections and other
statements about future events that are based on current
expectations and assumptions and, as a result, are subject to risks
and uncertainties. Many factors could cause actual future events to
differ materially from the forward-looking statements in this press
release, including but not limited to: (i) the risk that the
transaction may not be completed in a timely manner or at all,
which may adversely affect Cavium's business and the price of its
common stock and/or Marvell's business and the price of its common
shares, (ii) the failure to satisfy the conditions to the
consummation of the transaction, including the adoption of the
merger agreement by the stockholders of Cavium, the approval of the
issuance of Marvell shares in the transaction by the shareholders
of Marvell, and the receipt of certain governmental and regulatory
approvals, (iii) the failure of Marvell to obtain the necessary
financing pursuant to the arrangements set forth in the debt
commitment letters delivered pursuant to the merger agreement or
otherwise, (iv) the occurrence of any event, change or other
circumstance that could give rise to the termination of the merger
agreement, (v) the effect of the announcement or pendency of the
transaction on Cavium's business relationships, operating results,
and business generally, (vi) risks that the proposed transaction
disrupts current plans and operations of Cavium or Marvell and
potential difficulties in Cavium employee retention as a result of
the transaction, (vii) risks related to diverting management's
attention from Cavium's ongoing business operations, (viii) the
outcome of any legal proceedings that may be instituted against
Marvell or against Cavium related to the merger agreement or the
transaction, (ix) the ability of Marvell to successfully integrate
Cavium's operations and product lines, (x) the ability of Marvell
to implement its plans, forecasts, and other expectations with
respect to Cavium's business after the completion of the proposed
merger and realize the anticipated synergies and cost savings in
the time frame anticipated or at all, and identify and realize
additional opportunities, and (xi) the risk of downturns in the
highly cyclical semiconductor industry. The foregoing list of
factors is not exhaustive. You should carefully consider the
foregoing factors and the other risks and uncertainties that affect
the businesses of Marvell and Cavium described in the "Risk
Factors" section of their respective Annual Reports on Form 10-K,
Quarterly Reports on Form 10-Q and other documents filed by either
of them from time to time with the SEC. These filings identify and
address other important risks and uncertainties that could cause
actual events and results to differ materially from those contained
in the forward-looking statements. Forward-looking statements speak
only as of the date they are made. Readers are cautioned not to put
undue reliance on forward-looking statements, and Marvell and
Cavium assume no obligation and do not intend to update or revise
these forward-looking statements, whether as a result of new
information, future events, or otherwise. Neither Marvell nor
Cavium gives any assurance that either Marvell or Cavium will
achieve its expectations.
Marvell and the Marvell logo are registered
trademarks of Marvell and/or its affiliates.
For further information, contact:
T. Peter Andrew
Vice President, Treasury and Investor Relations
(408) 222-0777
ir@marvell.com
1 Based on last quarter annualized revenues as of
7/29/2017 for Marvell and
9/30/2017 for Cavium.
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SOURCE Marvell Technology Group Ltd.; Cavium, Inc.