& cplSiteName &

Avago Looking to Acquire Marvell – Rumor

Sarah Thomas
7/17/2015
50%
50%

Fresh off of its purchase of Broadcom, Avago is eyeing another acquisition -- that of fellow semiconductor vendor Marvell, Light Reading has learned.

A reputable source tells us that Avago Technologies Pte. is looking to make a bid for Marvell Technology Group Ltd. (Nasdaq: MRVL). Marvell is a direct competitor to Broadcom in several key market areas, including home networking and wide area networking equipment. Avago announced in May it was acquiring Broadcom for $37 billion. (See What Will Avago Do With Broadcom? and Avago Seals Deal to Buy Broadcom for $37B.)

Avago has been on an M&A binge of late as it also purchased Emulex in February and LSI for $6.6 billion in December 2013, although it divested much of LSI to Intel Corp. (Nasdaq: INTC) and Seagate Technology LLC (Nasdaq: STX). (See Avago Eyes Enterprise Storage With Emulex Buy and Avago to Buy LSI for $6.6B.)

Heavy Reading analyst Simon Stanley, who covers the chip market, has not heard the rumor, but notes that Marvell is one fifth the size of Broadcom, so market cap shouldn't be an issue, especially once Avago has Broadcom's buying power under its belt. Yet whereas Avago and Broadcom were primarily complementary, Broadcom and Marvell have significant overlap.

"If I was a customer I would be concerned about the reduction in competition," Stanley comments. "On the other hand it would help Avago build a dominant position in these markets."


Got a hot tip or scoop for Light Reading? Send it to editors@lightreading.com. Anonymity assured (within reason).


Real Wireless consult and UltraSoC CEO Rupert Baines hadn't heard the rumor either, but thought it may be too soon following its acquisition of Broadcom.

If it is true, however, he says Avago could be following the model of how Cisco Systems Inc. (Nasdaq: CSCO) operated in the 1990s: "acquire; market cap grows by a bit more than the sum of the two, which means they could acquire someone bigger, and the fact [that] you are growing fast means your shares go up more, so you can afford something bigger still."

It's lifting yourself up by the bootstraps, Baines says, "but it is a pretty grueling routine, and I am not sure investors would feel comfortable."

Avago was spun out of Agilent in 2005. It has a history with Marvell as well. Marvell actually acquired Avago's printer semiconductor business back in 2006 for $240 million. (See Agilent Becomes Avago and Avago IPO's a Go.)

Neither Avago nor Marvell responded to a request for comment at the time of publication.

— Sarah Thomas, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, Editorial Operations Director, Light Reading

(6)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
dandan123
100%
0%
dandan123,
User Rank: Light Beer
7/26/2015 | 6:34:11 PM
This makes absolutely no sense at all

Putting asside anti-trust issues, this simplay makes absolutely no sense, at all.

Marvell is widely considered as a badly managed, crappy company with a poor product line.
These guys have been losing to Broadcom and Qualcomm pretty much on every socket they've competed on.

Why on earth would Avago/Broadcom even consider buying them.. ?
Sounds like someone is trying to dump Marvell stocks, fast.
kq4ym
50%
50%
kq4ym,
User Rank: Light Sabre
7/21/2015 | 3:05:49 PM
Re: Marvell's moble SoC business
I wonder how true it may or may not be that "market cap grows by a bit more than the sum of the two, which means they could acquire someone bigger, and the fact you are growing fast means your shares go up more." If true the race should be on by all smaller firms to acquire their bigger competitors.
Sarah Thomas
50%
50%
Sarah Thomas,
User Rank: Blogger
7/20/2015 | 11:59:10 AM
MKM investment note
MKM got in touch about our article and said it's telling its clients:

Lightreading is reporting that a "reputable source" says AVGO will make a bid for MRVL.  We retain a degree ofskepticism given Lightreading's lack of track record.  Furthermore, nearly 100% of MRVL's business would face significant anti-trust issues or is unattractive, in our opinion: (1) MRVL's storage business competes with LSI, (2) their networking business competes with BRCM, and (3) their wireless chipset business is considered unattractive.   

We would point to our recent INTC for ALTR  note, The Future in Semis Looks a Lot More Like The Retro 90's on why fabless models such as MRVL are attractive for consolidation, though not necessarily by AVGO in this particular case.

 Marvell Technology Group Ltd. (MRVL, Buy, $12.78, $16 PT)

Avago Technologies Limited (AVGO, Buy, $134.70, $160 PT)

Intel Corp. (INTC, Buy, $29.90, $40 PT)

Altera Corporation(ALTR,NR, $50.32)

Broadcom Corporation Class A(BRCM,NR, $53.43)

 

mhui0
50%
50%
mhui0,
User Rank: Lightning
7/18/2015 | 11:23:59 AM
Marvell's moble SoC business
I hope Marvell's moble SoC business is saved and strengthened if the acquisition goes through. Competition in that space has been brutal, and Marvell has a very competitive offering; just not the name recognition that Qualcomm has enjoyed up to now.
danielcawrey
50%
50%
danielcawrey,
User Rank: Light Sabre
7/17/2015 | 9:09:08 PM
Re: chip chatter
Marvell does some interesting things, using ARM to build a whole bunch of different microprocessor applications. I like them, and I also agree with the idea that Avago could be like a smaller Cisco in how it goes after companies going forward. It's a viable strategy given how quickly things change in technology. 
Sarah Thomas
100%
0%
Sarah Thomas,
User Rank: Blogger
7/17/2015 | 2:25:06 PM
chip chatter
I will update as soon as I hear back from Marvell and Avago, of course. What do you all think? Would this create a semiconductor vendor that can't be beat, or would it be a bad, costly move for Avago?
From The Founder
Either we perform a complete 'factory reset' on the way the telecom industry creates and deploys virtualization, or we face the consequences.
Flash Poll
Live Streaming Video
Charting the CSP's Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
LRTV Custom TV
The Urgency of Commercial 5G Services

4|26|17   |     |   (0) comments


The progress of 5G has been closely monitored in the industry. At the 2017 Brooklyn 5G Summit, the sense of urgency for a commercial 5G launch had started to surface among operators.
Women in Comms Introduction Videos
How Diversity Helps Comcast Mirror Its Customer Base

4|26|17   |   2:55   |   (0) comments


Diversity brings innovation, creative ideas and a way to reflect the broad spectrum of your customer base, Comcast Director of Customer Experience Jenelle Champlin says.
LRTV Huawei Video Resource Center
Mobile Operators & Video

4|25|17   |     |   (0) comments


Ovum's Ed Barton discusses the latest mobile operator strategies for mobile video.
LRTV Custom TV
Infinera Introduces Instant Network

4|20|17   |     |   (1) comment


Mike Capuano, vice president of marketing at Infinera, discusses the advancement from Instant Bandwidth to new Instant Network capabilities, which include Bandwidth License Pools, Moveable Licenses and Automated Capacity Engineering (ACE).
Women in Comms Introduction Videos
Vodafone's Eubank on Sponsors, Mentors & Moving On Up

4|19|17   |   4:25   |   (0) comments


Vodafone America's Head of Operations Kimberly Eubank breaks down the difference between a sponsor and a mentor and shares why both made a big difference in her career.
LRTV Custom TV
NYC Auto Show: Are We Smart Yet?

4|18|17   |     |   (0) comments


The auto industry is facing some big transformations as electric vehicles, autonomous technology and connected cars are seen as the future of the industry. During the much-anticipated NY international auto show, there was an emergence of new technology and mobility service on the show floor. Aside from performance, brands like Lincoln, Hyundai, Honda, Mercedes and ...
LRTV Huawei Video Resource Center
The Impact of Video

4|18|17   |     |   (0) comments


David Mercer from Strategy Analytics discusses the impact of video on current strategies.
LRTV Custom TV
Pardeep Kohli Discusses Network Transformation & the Market Opportunity for the 'New' Mavenir Systems

4|13|17   |     |   (0) comments


In a brief discussion at MWC 2017, Heavy Reading analyst Adi Kishore talks to Pardeep Kohli, CEO, Mavenir Systems about the creation of the 'new Mavenir' and some of the key challenges facing operators in today's market. A key theme of the discussion centers around operator need for software-only, virtualized solutions and how they will need to adapt to ...
Women in Comms Introduction Videos
Tech Maverick Shares Her Tips for Gender Inclusivity

4|12|17   |   7:28   |   (0) comments


Wendy Hall Bohling, a corporate escapee, author and gender exclusivity consultant, tells her story of sexism, bias and progress along the road to gender equality in the workforce.
LRTV Huawei Video Resource Center
Huawei at MWC 2017

4|11|17   |     |   (0) comments


At Mobile World Congress 2017, the biggest mobile industry gathering of the year, Huawei showcased its new innovations and solutions with the theme "Open Road," which focuses on cloud, 5G, operation transformation, videos and consumer-oriented products. Its campaign has been recognized by three awards given by GSMA.
LRTV Custom TV
China Telecom NFV Infrastructure on RSD

4|6|17   |     |   (0) comments


Lynn Comp, senior director of market development of Intel, is joined by Chong Zhang, storage engineer at Inspur and Ou Li Yan, architect for technology strategies of China Telecom, for a discussion of what NFV brings.
LRTV Custom TV
Nokia's IMPACT Software Demo

4|6|17   |     |   (0) comments


Khamis Abulgubein of IoT market development at Nokia demonstrates IMPACT (intelligent management platform for all connected things), a software solution with a horizontal approach to managing any device on any application.
Upcoming Live Events
May 15-17, 2017, Austin Convention Center, Austin, TX
May 15, 2017, Brazos Hall - Austin, TX
May 15, 2017, Austin Convention Center - Austin, TX
June 6, 2017, The Joule Hotel, Dallas, TX
All Upcoming Live Events
Infographics
With the mobile ecosystem becoming increasingly vulnerable to security threats, AdaptiveMobile has laid out some of the key considerations for the wireless community.
Hot Topics
Surprise! AT&T Markets 4G Advances as '5G Evolution'
Dan Jones, Mobile Editor, 4/25/2017
Did Verizon Outbid AT&T for Straight Path?
Dan Jones, Mobile Editor, 4/25/2017
Netflix Set to Enter China
Mari Silbey, Senior Editor, Cable/Video, 4/25/2017
First Year TIPs the Scale Toward Success
Denise Culver, 4/24/2017
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
One of the nice bits of my job (other than the teeny tiny salary, obviously) is that I get to pick and choose who I interview for this slot on the Light Reading home ...
TEOCO Founder and CEO Atul Jain talks to Light Reading Founder and CEO Steve Saunders about the challenges around cost control and service monetization in the mobile and IoT sectors.
Live Digital Audio

Playing it safe can only get you so far. Sometimes the biggest bets have the biggest payouts, and that is true in your career as well. For this radio show, Caroline Chan, general manager of the 5G Infrastructure Division of the Network Platform Group at Intel, will share her own personal story of how she successfully took big bets to build a successful career, as well as offer advice on how you can do the same. We’ll cover everything from how to overcome fear and manage risk, how to be prepared for where technology is going in the future and how to structure your career in a way to ensure you keep progressing. Chan, a seasoned telecom veteran and effective risk taker herself, will also leave plenty of time to answer all your questions live on the air.