Marvell Technology's Latest M&A Deal Should Add $300M To Topline, Says Bullish Oppenheimer

Marvell Technology Group Ltd. MRVL announced the acquisition Monday of Avera Semiconductor from GlobalFoundries.

Earlier this month, the semiconductor company announced a deal to buy Aquantia Corp AQ.

The two acquisitions — of the leader in multi-gig ethernet connectivity and the maker of custom ASICs — are both strategic and accretive, according to Oppenheimer.

The Analyst

Rick Schafer maintained an Outperform rating on Marvell Technology with a $26 price target.

The Thesis

The deal to acquire Avera Semiconductor is expected to close by the end of fiscal 2020 and to be accretive to its calendar 2020 earnings, Schafer said in a Monday note.

The deal should add 4 cents to the company’s 2020 EPS, the analyst said.

The custom ASIC maker will add $300 million to Marvell's topline, Schafer said.

What's more significant than the topline accretion is that the firm has an established team of 800 BST, networking and DC engineers, he said.

The deal may be small, but it is strategic, as it adds to Marvell's networking portfolio, the analyst said.

The deal complements the company’s current 5G BST exposure in baseband, processors, switches and PHYs, which helps create a “one-stop-shop” custom ASIC portfolio with limited merchant competition, Schafer said.

Avera Semiconductor could bring large equipment OEM relationships while strengthening Marvell Technology’s position with existing partners, according to Oppenheimer.