(Editor’s note: The headline and story were updated to include MRVL’s stock move premarket)
SoftBank Group Corp. (OTC:SFTBY) explored a potential takeover of U.S. chipmaker Marvell Technology Inc. (NASDAQ:MRVL) earlier this year, with the idea of combining it with Arm Holdings (NASDAQ:ARM), the UK chip designer that it controls, according to a report.
Shares in Marvell jumped 9.8% to $102 in pre-market trading on Thursday, following the report.
Hardware Bet Amid AI Boom
The Japanese conglomerate’s CEO, Masayoshi Son, has been studying Marvell as a possible target on and off for years in a bid to beef up SoftBank’s hardware bet that can benefit from the artificial intelligence (AI) boom, Bloomberg reported on Thursday.
SoftBank even made overtures to Marvell several months ago, but the two sides couldn't reach an agreement on terms, the report said, citing people familiar with the matter.
SoftBank, Marvell, and Arm did not immediately respond to Benzinga‘s requests for comment.
SoftBank has sought to strengthen its AI plays through investments and acquisitions in different areas of technology. Apart from Arm, it has a major stake in ChatGPT owner OpenAI, and it bought the robotics division of Swiss engineering firm ABB (OTC:ABBNY) in a $5.4 billion deal last month.
In January, it announced a $500 billion project called Stargate, alongside OpenAI and Oracle Corp. (NYSE:ORCL), to build data centers in the U.S.
How Does Marvell Compare With Peers?
If SoftBank were to proceed with a deal for the Santa Clara, California-based company, it would have been the semiconductor industry’s largest-ever deal. The last big deal in the industry was when Advanced Micro Devices (NASDAQ:AMD) acquired Xilinx in 2022, in an all-stock transaction valued at about $50 billion.
Marvell’s shares have fallen about 18% so far this year, giving the company a market capitalization of about $80 billion, according to data from Benzinga Pro. That’s in contrast with peers Nvidia Corp. (NASDAQ:NVDA), Broadcom Inc. (NASDAQ:AVGO), Arm, Intel (NASDAQ:INTC), and AMD, which have all surged this year.
That drop came after Marvell, which counts Amazon Web Services and Microsoft as its clients, suffered its worst stock decline in over two decades after a revenue forecast fell short of expectations.
Softbank acquired Cambridge-based Arm, which now has a market cap exceeding $169 billion and has a client roster ranging from Apple to Samsung, for $32 billion in 2016. Nvidia tried to purchase Arm from SoftBank four years later, offering $40 billion, but the deal collapsed due to regulatory hurdles.
Tech Valuation Jitters
A potential takeover of Marvell comes as investors grow increasingly wary of an “AI bubble” this year, which has seen tech stock valuations hit record highs. This led to a sell-off in major indexes in Asia on Wednesday, following a sell-off in the U.S. on Tuesday.
SoftBank’s shares suffered a 10% drop on Wednesday, wiping off billions from Son's net worth.
However, U.S. stocks rebounded on Wednesday as these jitters abated and on the back of strong earnings reports and better-than-expected economic data. Asia stocks also rebounded on Thursday, with Japan’s benchmark Nikkei 225 index up 1.33% as of last check.
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