Starboard Takes 6.7% Stake in Marvell Technology
February 03 2016 - 7:10AM
Dow Jones News
Activist investor Starboard Value LP has taken a 6.7% stake in
Marvell Technology Group Ltd. and is betting the beleaguered
semiconductor company can boost margins among other
improvements.
The position adds to pressure on Marvell, which is facing
investigations into its accounting amid a sharp fall in its
stock.
Shares of the company, which is based in Bermuda but run from
Santa Clara, Calif., are down 44% over the past 12 months, with
most of the decline following the September announcement of an
internal review into its accounting that was coupled with
weaker-than-expected results. In December, the company said it had
received inquiries from U.S. officials relating to its accounting
and disclosed worsening results. The company said it was
cooperating with the investigations.
A Marvell spokesperson wasn't immediately available to comment
late Tuesday.
The Wall Street Journal initially reported the stake Tuesday
night, and the news was confirmed by a filing Wednesday with the
Securities and Exchange Commission.
The company is run by husband-and-wife co-founders Sehat
Sutardja, who is chairman and chief executive, and Weili Dai, who
is president. Its chips are used primarily in storage devices and
for networking.
Starboard sees opportunity for Marvell to boost its margins by
slashing costs, for instance by exiting the mobile-device business
that has failed to live up to expectations, the people said.
Marvell already said in September that it would scale back that
business and cut 17% of its workforce of more than 7,000.
The company has a market value of about $4.5 billion and about
$2.3 billion in cash, which activists often say should be handed to
investors.
Starboard has a history of investing in semiconductor companies,
with 10 campaigns in which it had a more than 5% stake requiring
disclosure and several smaller ones. Many of the companies wound up
selling themselves after Starboard pushed for board and management
changes.
For Marvell, Starboard has hired as advisers three semiconductor
executives with whom it has worked on other investments, the people
said. They are Richard S. Hill, chairman at Tessera Technologies
Inc., which previously fought Starboard in a proxy fight before
settling; Oleg Khaykin, former CEO of International Rectifier
Corp.; and Jeffrey S. McCreary, most recently of Integrated Device
Technology Inc.
Marvell has occasionally been flagged by analysts as a potential
takeover target, especially as mergers in the semiconductor sector
have boomed in recent years.
In December, Cowen analyst Timothy Arcuri said the stock could
be worth $17.35 a share if the company were broken up and sold off.
It closed at $8.67 Tuesday.
Write to David Benoit at david.benoit@wsj.com
(END) Dow Jones Newswires
February 03, 2016 06:55 ET (11:55 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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