Volume 10, Number 2, December 2015
| An International Merger & Acquisition Case Study – Marvell Acquires RDA Strategy and Valuation |
Abstract
This study aims to use a strategy and valuation analysis in order to examine the possibility of a merger and acquisition case between an U.S. company and a Chinese company. Marvell Technology Group is a U.S. company specializing in wireless chipsets, and RDA Microelectronics Inc. is a Chinese company focusing on chipsets for feature phones. The analysis reveals that Marvell Technology Group would be able to expand its market through the acquisition of RDA. In RDA, Marvell finds the right partner to complement and enhance its core competencies along three dimensions: (1) integrating functions into a single chip at a lower cost; (2) shortening product time-to-market (TTM) by designing new more powerful chips and a comprehensive turnkey solution; (3) integrating its value chain to exert greater control, thus further reducing costs and shortening TTM. A successful acquisition will enable Marvell to provide a more competitive turnkey solution with a better-integrated supply chain. This in turn will allow it to increase its revenue from the low-end smart phone market and cross-selling products, as well as reduce costs in production, R&D, and SG&A through an economy of scale and scope. The synergies resulting from the acquisition will catapult Marvell into the industry’s top three companies on a global scale.
Keywords:Smart phone, Chips, Acquisition, Synergy, Base offer
JEL Classification: G34, L63