Marvell competes against Broadcom Inc to supply chips that move data around on copper-based cables. But Inphi designs chips that move data over fiber-optic cables hundreds of times faster than copper cables.
Companies such as Amazon.com, Alphabet Inc's Google, Microsoft Corp and Facebook Inc use Inphi's chips for optical connections inside the massive data centers that power their online services.
Inphi has also won deals to help Microsoft string together its data centers with high-speed optical connections and to connect various parts of 5G networks.
Data centers and 5G infrastructure "are our two key markets" Marvell Chief Executive Matt Murphy told Reuters in an interview. "They are right in there," Murphy said of Inphi, "so the fit is really good."
The deal comes amid a flurry of tie-ups in the semiconductor industry this year. Advanced Micro Devices Inc on Tuesday said it would buy Xilinx Inc in a $35 billion deal, following Nvida Corp's $40 billion purchase of SoftBank Group Corp's Arm Ltd and Analog Devices Inc's $21 billion acquisition of Maxim Integrated Products .
Under the deal, Marvell will give Inphi shareholders $66 in cash and 2.32 shares of stock in the combined company for each share of Inphi. After the deal, Marvell shareholders will own about 83% of the combined company, with Inphi shareholders owning about 17%.
Marvell plans to use balance sheet cash and debt to fund the deal, taking on about $4 billion in new debt in connection with the transaction with financing commitments from JPMorgan Chase & Co.
While Marvell is headquartered in Silicon Valley, it's currently domiciled in Bermuda. After the transaction, both Marvell and Inphi will become subsidiaries of a new U.S.-domiciled holding company. The deal is expected to close in the second half of 2021.