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What Drove Marvell Tech’s Stock Higher Last Month?

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Dec. 4 2017, Published 3:08 p.m. ET

Marvell Technology rose 22.5% last month

The stock price of hardware tech (QQQ) firm Marvell Technology (MRVL) rose 22.5% in November 2017, closing the month at $22.34 on November 30. The stock is trading 64% above its 52-week low of $13.59 and 7.8% below its 52-week high of $24.22.

The stock has generated returns of 56% in the trailing-12-month period and 60% in calendar 2017 after rising 61% last year.

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Marvell plans to acquire Cavium

Marvell Tech stock rose last month on the news that the semiconductor (SMH) firm intends to acquire Cavium (CAVM). The deal is valued at $6 billion, and Marvell plans to finance the acquisition with all cash and debt available. The acquisition is expected to close by mid-2018, with Cavium shareholders gaining ~25% of the combined entity.

Marvell is one of the major firms that provide chips for HDDs (hard-disk drives), while Cavium supplies processors for server software. This acquisition is expected to impact revenues positively, as well as help margins and profitability for the combined entity. The deal could create synergies between $150 million and $175 million within 18 months of the close of the acquisition.

The deal should also help Marvell diversify its portfolio of products, as the firm is now facing sluggish demand, driven by competition from other data storage solution firms. The deal will likely provide Marvell with access to the server microprocessor market, wherein Intel (INTC), Qualcomm (QCOM), and Broadcom (AVGO) are the leading players.

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