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NXP Semiconductors To Buy Marvell's Wi-Fi Connectivity Business For $1.76 Bln

Marvell Technology Group Ltd. (MRVL) said Wednesday that NXP Semiconductors N.V. (NXPI) has agreed to acquire Marvell's Wi-Fi Connectivity business for $1.76 billion in cash. Shares of Marvell are rising almost 4 percent in pre-market activity following the announcement.

The acquisition includes Marvell's Wi-Fi and Bluetooth technology portfolios as well as related assets. The business, which employs about 550 people worldwide, generated roughly $300 million in revenue in Marvell's fiscal 2019.

The board of directors of both companies have approved the transaction, which is expected to close by the calendar first quarter of 2020.

Marvell said it expects this divestiture will bolster its gross and operating margins upon closing.

The company added that it will address all questions regarding the transaction during its conference call to review its first quarter of fiscal 2020 financial results on Thursday, May 30, 2019.

"NXP has built a broad consumer footprint and an optimized platform for IoT applications, making it an ideal home for our innovative Wi-Fi technology and team. At the same time, this transaction yields a premium valuation and substantially higher economic return for Marvell shareholders while accelerating our transformation into a leading infrastructure supplier spanning 5G, data center, enterprise and automotive Ethernet applications," said Matt Murphy, president and CEO of Marvell.

Separately, NXP said it expects the acquisition to create new revenue opportunities in its target end markets. With about $300 million in revenue in Marvell's fiscal 2019, NXP anticipates revenue associated with the acquired assets to double by 2022.

According to NXP, the acquisition will enable it to offer its customers a full range of wireless connectivity solutions including WiFi 4, 5, 6 and Bluetooth/ BLE combo, along with its flagship edge computing platforms including I.MX, Layerscape, Kinetis, LPC and the newly introduced RT Crossover Processors to provide turn-key solutions for the Industrial & IoT, Automotive and Communication Infrastructure markets.

The company expects the acquisition to be accretive to its adjusted operating profit in the first full quarter after the transaction closes.

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