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NXP to Expand Portfolio by Acquiring Marvell’s Wireless Business

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NXP to acquire Marvell’s wireless connectivity business

On May 29, NXP Semiconductors (NXPI) announced plans to acquire Marvell Technology Group’s (MRVL) wireless connectivity business for a cash consideration of $1.76 billion. NXP expects the deal to close by the first quarter of 2020, subject to regulatory approval. In 2018, NXP’s acquisition by Qualcomm was canceled, as the deal got stuck due to the US-China trade war. It remains to be seen if the NXP-Marvell deal gets impacted by the trade war.

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Benefits for NXP

NXP offers secure connectivity solutions for embedded applications. The acquisition of Marvell’s wireless connectivity business will add Wi-Fi and Bluetooth products to NXP’s portfolio, allowing it to offer complete scalable processing and connectivity solutions.

The acquisition will add $300 million to NXP’s annual revenue of $9.4 billion. The company expects to double the revenue from Marvell’s business by cross-selling the Wi-Fi and Bluetooth products to its target markets of automotive, industrial, smart home, mobile, and communication infrastructure.

Benefits for Marvell

Marvell stock rose 3.13% on May 29 on the divestment news, as it should enable the company to focus on the storage, networking, and server markets. Last year, Marvell expanded its storage controller, networking, and connectivity solutions portfolio by adding Cavium, which designs processors for network, security, storage connectivity, server, and other applications.

The $1.76 billion cash received from NXP will help Marvell strengthen its balance sheet where it has a long-term debt of $1.68 billion and a cash reserve of $572 million.

The acquisition comes at a time when the trade war has slowed the 5G (fifth generation) rollout. NXP’s stock fell 14%, and MRVL fell 11.3% month-to-date.

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