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Marvell's (MRVL) Inphi Buyout Gets Regulatory Approval in China

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Marvell Technology’s (MRVL - Free Report) deal to acquire Inphi Corporation took another step forward yesterday with an important regulatory approval from China. The provider of data infrastructure semiconductor solutions, Marvell, announced that the State Administration for Market Regulation of the People's Republic of China has approved the acquisition proposal. The $10-billion acquisition is expected to close in April 2021, after a shareholders meeting on Apr 15.

Prior to this, the acquisition proposal had received a regulatory approval from the U.S. Federal Trade Commission, wherein the waiting period for a review of the transaction under the Hart-Scott-Rodino (HSR) Act expired in December last year. This was important because the HSR Act seeks to ensure due filing of all documents necessary for mergers, acquisitions and transfer of assets or securities by companies with the U.S. Federal Trade Commission and Department of Justice.

Markedly, in October last year, Marvell and Inphi had inked a definitive agreement, under which the former would acquire the latter in a cash-and-stock deal, paying $66 per share in cash and 2.323 shares of stock for each share of Inphi. Following the deal’s closure, Marvell shareholders will own 83% of the combined company, while Inphi stockholders will own the remaining 17%.

Notably, the acquisition will integrate Inphi's powerful electro-optics interconnect platform into Marvell’s storage, networking, processor and security portfolio, broadening its leadership in data centers and extending its 5G network infrastructure. The total addressable market of the combined company will also expand with this deal.

Marvell plans to reorganize the combined company and create a $40-billion semiconductor powerhouse. Inphi's growing clout among cloud customers will also open up additional opportunities for Marvell's DPU and ASIC products.

The deal will likely generate annual run-rate synergies of $125 million to be realized within 18 months after the transaction’s conclusion. It will also be accretive to Marvell's non-GAAP earnings per share by the end of the first year after the deal’s closure.

Zacks Rank & Stocks to Consider

Marvell currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the broader technology sector are Skyworks Solutions (SWKS - Free Report) and Vishay Intertechnology, Inc. (VSH - Free Report) , each sporting a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The long-term earnings growth rate for Skyworks Solutions and Vishay Intertechnology are currently pegged at 18.98% and 20.26%, respectively.

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