Investing.com -- Infineon (OTC:IFNNY) Technologies (ETR:IFXGn) announced plans to acquire Marvell (NASDAQ:MRVL) Technology’s automotive ethernet unit for $2.5 billion in cash, aiming to strengthen its automotive microcontroller offerings.
The business, which includes the Brightlane Automotive Ethernet portfolio, will be integrated into Infineon’s automotive division.
The deal is expected to close by the end of the year. Infineon said it has secured financing and will take on new debt to fund the acquisition.
The acquired unit is projected to contribute $225 million to $250 million in revenue in fiscal 2026, with a gross margin close to 60%, representing around 3% of Infineon’s consensus revenue forecast.
While Marvell hasn’t specified how it plans to use the proceeds, the transaction is seen as improving its financial flexibility.
“Marvell's automotive business represents a minor portion of revenue and is not a strategic priority for the company, which at this point is primarily focused on capitalizing on its AI opportunities in networking and ASICs,” Morgan Stanley (NYSE:MS) analyst Joseph Moore said in a note.
“At 10-11x sales, the deal appears attractive for Marvell (which is trading under 5x) and is a solid outcome for all the parties involved, in our view,” he added.
Moore points to Marvell’s solid track record in portfolio management, citing several well-timed acquisitions and divestitures in recent years. That includes its 2019 sale of the WiFi business, followed by the acquisition of Aquantia—a component of the business now being sold.
The analyst expects the divestiture to sharpen Marvell’s focus on its data center business, which he estimates will account for nearly 80% of revenue in fiscal 2026.
He also sees increased financial flexibility as a benefit, potentially enabling share repurchases or further inorganic growth.