The acquisition is a cash and stock deal that values Q Logic at $1.4 billion in equity value.
Cavium will acquire all of Q Logic's outstanding common stock at $15.50 per share, reported CNBC's Seema Mody. This will include $11 in cash and approximately $4.50 per share of Cavium common stock.
The company expects the deal to boost 2017 adjusted earnings by 60 cents to 70 cents.
"The scale of operations of a nearly $1 billion revenue business will allow the combined company to deliver better solutions for customers and create more career opportunities for employees. Shareholders will benefit from both the immediate premium, as well as the opportunity to participate in the long-term value creation from the combined company's strong growth prospects," Q Logic Executive Chairman Christine King said in a statement.
The deal is expected to close in the third quarter of 2016 pending customary closing conditions, such as the successful tender exchange offer of Q Logic's common stock and relevant regulatory approvals.
Separately, TheStreet Ratings team set Q Logic at a "hold" with a ratings score of C+. The company's strengths can be seen in multiple areas, such as its increase in net income, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and a generally disappointing performance in the stock itself.
TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
You can view the full analysis from the report here: QLGC