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Marvell Rises on Buyout Rumor

Analysts are saying that private-equity firms are flush but not buying the chipmaker -- and neither is TI.

Marvell

(MRVL) - Get Marvell Technology, Inc. Report

shares got a boost Friday as rumors swirled that the company was an acquisition target.

While there isn't a shred of evidence to indicate that any of the rumors have substance, the

recent frenzy of private-equity activity in the semiconductor sector was enough to get investors juiced on the notion.

Marvell's stock closed up 4.5%, or 77 cents, at $17.65 on a day when most other chipmakers were down on a widespread tech selloff.

Two separate rumors involving the fate of Marvell are circulating, according to several Wall Street analysts. In one scenario, Marvell is a leveraged buyout target by private-equity firms. The other has chip giant

Texas Instruments

(TXN) - Get Texas Instruments Incorporated Report

swallowing Marvell.

Marvell did not return calls seeking comment.

One sell-side chip analyst was particularly dismissive of the LBO rumor.

"I've never heard anything more absurd in my life," said the analyst, who wished to remain anonymous.

Chip companies have received a surge in recent interest from private-equity firms, flush with money and looking for new investments. In September, a consortium of firms led by

Blackstone Group

acquired

TheStreet Recommends

Freescale Semiconductor

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for $17.6 billion.

Not long before that deal, another private equity group including

Kohlberg Kravis Roberts & Co.

picked up an 80% stake in

Philips Semiconductor

, now called

NXP

.

Since then, speculation has mounted about who might be next, with names like

STMicrolectronics

(STM) - Get STMicroelectronics NV Report

and

Cypress Semiconductor

(CY) - Get Cypress Semiconductor Corporation Report

at the top of the list. (Cypress announced earlier this month that it had

dropped plans to sell itself.)

Marvell's addition to the club comes out of left field, and according to several analysts the move is not entirely logical.

Private-equity firms generally look for companies with specific traits, such as a steady cash flow that's not reflected in a company's market value.

Although Marvell's stock is trading at the low end of its 52-week range after its

negative preannouncement earlier this month, it still carries a fairly high multiple on its annual sales.

Nor are there obvious layers of fat to trim or assets that could be spun off -- standard operating procedure after private-equity buyouts -- say analysts.

The Texas Instruments rumor appeared even less probable to some.

True, Marvell is moving into TI's cell-phone turf after its

$600 million purchase of

Intel's

(INTC) - Get Intel Corporation Report

handheld-communications and applications-processor business in June.

But it's hard to see why TI would want that business, given that the reason Intel sold it was precisely because it was unable to make any headway against entrenched players like TI.

And it isn't immediately apparent what other products in Marvell's catalog might pique TI's interest. TI is already represented in wireless networking and Ethernet chips, both strong suits of Marvell. And TI exited a good portion of the hard-disk-drive chip market, which Marvell plays in.

"I guess anytime somebody wants a stock to go up, they say TI is going to buy them," said the sell-sider, citing recurring rumors of a TI acquisition of

Silicon Labs

(SLAB) - Get Silicon Laboratories Inc. Report

.