Marvell Technology Group Ltd. (NASDAQ:MRVL) is selling its Automotive Ethernet business to Germany’s Infineon Technologies for about $2.5 billion in cash, as the US chipmaker sharpens its focus on the fast-growing data center market.
The transaction, expected to close by the end of the year, includes Marvell’s Brightlane portfolio and is projected to generate between $225 million and $250 million in revenue in fiscal 2026, the companies said.
Shares of Marvell rose 4.3% in premarket trading following the announcement.
“We believe this transaction delivers the strongest financial return for Marvell shareholders, given its compelling valuation,” Marvell CEO Matt Murphy said in a statement.
The company plans to provide more detail on the divestiture during its first-quarter earnings call on May 29.
Marvell’s Automotive Ethernet business has a gross margin of around 60%, according to Wedbush analysts, who said the deal makes strategic sense for both parties.
“We see Monday's news as a sensible outcome for both companies,” Wedbush said in a note to clients. “Marvell sells a non-core asset for an attractive ~10X sales. And while Infineon arguably paid a premium for the business, they, in turn, further build out their automotive portfolio with a high gross margin offering.”
Wedbush also noted that the timing of the deal is favorable for Marvell, given current economic uncertainty weighing on both demand and company valuations.