Marvell wants to gain scale in a semiconductor industry that is rapidly consolidating and it is pretty late to the "buy-out-your-rival" game.
Under the deal, Marvell will offer $40.00 per share in cash and 2.1757 of its shares for each Cavium share.
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.
The Hamilton, Bermuda-based Marvell Technology makes storage and WiFi equipment while Cavium builds network equipment.
“This is an exciting combination of two very complementary companies that together equal more than the sum of their parts”, Marvell’s Chief Executive Matt Murphy said in a statement.
Marvell plans to fund the deal with a combination of cash on hand from the combined companies and $1.75 billion in debt financing, the company said.