(Reuters) Shares of Marvell were up 1% while shares of Cavium were up 7.7% to $81.70 in premarket trading on Monday.
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 3 November, when media reports of the transaction first surfaced.
Offer an 11% premium
Marvell’s offer of $84.15 - based on the stock’s close on Friday - represents a premium of 11% to Cavium’s close, according to a Reuters calculation.
Hamilton, Bermuda-based Marvell makes chips for storage devices while San Jose, California-based Cavium builds network equipment.
“With Marvell facing secular challenges on its core chip business, this acquisition is a smart strategic move which puts the company in a stronger competitive position for the coming years,” said GBH Insights analyst Daniel Ives.