Deutsche Bank: Marvell Worth About $14–$16 In A Takeout Scenario, Management Turnover A 'Positive Surprise'

Marvell Technology Group Ltd. MRVL could be worth about $14–$16 a share in a takeout scenario, according to a report from Deutsche Bank. This represents a premium of about 29–47 percent from Tuesday's closing price of $10.88.

Marvell surged 13 percent Tuesday after the company announced its CEO Sehat Sutardja and President Weili Dai will leave the company effective immediately. The news triggered speculations the company could be a potential acquisition candidate.

"Based on our estimate of post-restructuring FY18 EPS power of $1, and on the median premium and EV/sales for semi acquisitions over the past ~2 years, we note a potential acquisition price for MRVL of ~$14- $16 although timing and probability are difficult to judge," analyst Ross Seymore wrote in a note.

Commenting on the management changes, Seymore said, "We believe this action will allow the co to unlock shareholder value initially through improved profitability and potentially as an acquisition candidate."

"While these are both positive potential outcomes, and we consequently raise our P/T to $13 based on our estimate of post-restructuring FY18 EPS power of $1, we maintain our Hold rating as we see a number of steps required to unlock this value and view the possibility of a takeout as less than probable," Seymore added.

On Tuesday, Marvell said the Board, in conjunction with a leading executive search firm, will conduct a search for a new CEO and President. The Board has formed an "Interim Office of the Chief Executive to oversee day-to-day leadership of the company's operations."

In a statement, the company said, "The Board believes that the time has come to move in a new leadership direction. The Company's highest priority is to leverage Marvell's strong core business and technology to drive the next stage of product innovation and profitable growth."

Notably, the company is still looking for a permanent Chief Financial Officer, and it said "a search for a permanent Chief Financial Officer and additional independent board members is underway with the assistance of an international executive search firm."