(Reuters) – Dutch chipmaker NXP Semiconductors NV said on Wednesday it will buy Marvell Technology Group Ltd. wireless connectivity business for $1.76 billion in cash to offer her customers a larger product portfolio.
FILE PHOTO: People look over a display at the NXP booth during the 2019 CES in Las Vegas, Nevada, USA January 8, 2019. REUTERS/Steve Marcus
NXP will sell Marvell’s connectivity products such as Wi-fi and Bluetooth, together with the edge of the computing platforms to its customers in the industrial, automotive and communications infrastructure markets.
The unit brought in $300 million in revenue for the Marvell in the fiscal year in 2019 and NXP expects that to double by 2022.
“NXP had underinvesting in Wi-fi for the last few years, because it had thought that it would be able to access Qualcomm’s Wi-fi technology, but in the middle of 2018, the deal has collapsed,” PiperJaffray analyst Harsh Kumar said.
Chipmaker Qualcomm Inc agreed to buy NXP in 2016, but walked away from the $44 billion deal last year after not in the Chinese regulatory approval to be in the middle of a bitter Sino-AMERICAN trade spat.
The deal with Marvell will help NXP, allowing a wide range of chips for industrial and automotive customers, cross-selling, Marvell’s products to its customers.
For Marvell, a sale of the connectivity business strategic sense as it is more focused on the equipment in the network of the market after its $6 billion acquisition of Cavium in 2017.
“We are not surprised by the rejection,” Kumar said. “Marvell believed that the company can make use of the assets to the automotive market, but the chance is quite small.”
The deal, expected in the first quarter of 2020, will add NXP’s operating profit in the quarter after the transaction closes.
Shares of Marvell rose by 3.8% to $22.17, while that of NXP were fractionally higher.
Reporting by Sayanti Chakraborty and Supantha Mukherjee in Bengaluru; Editing by Shinjini Ganguli and Saumyadeb Chakrabarty