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May 29 (Reuters) - Dutch chipmaker NXP Semiconductors NV said on Wednesday it will buy Marvell Technology Group Ltd's wireless connectivity business for $1.76 billion in cash to offer its customers a bigger product portfolio.
NXP will sell Marvell's connectivity products such as WiFi and Bluetooth along with its edge computing platforms to its clients in industrial, automotive and communication infrastructure markets.
The unit brought in $300 million in revenue for Marvell in fiscal 2019 and NXP expects that to double by 2022.
"NXP had been underinvesting in WiFi for the last few years, as it had assumed it would be able to access Qualcomm's WiFi technology, but in mid-2018, the deal collapsed," PiperJaffray analyst Harsh Kumar said.
Chipmaker Qualcomm Inc agreed to buy NXP in 2016 but walked away from the $44 billion deal last year after failing to secure Chinese regulatory approval amid a bitter Sino-U.S. trade spat.
The deal with Marvell will help NXP, which makes a wide range of chips for industrial and automotive customers, to cross-sell Marvell's products to its clients.
For Marvell, a sale of its connectivity business made strategic sense as it is focusing more on the network equipment market following its $6 billion acquisition of Cavium in 2017.
"We are not surprised to see the divestiture," Kumar said. "Marvell had believed the company could use the assets to enter the automotive market, but in our view, the opportunity is rather small."
The deal, expected to close by the first quarter of 2020, will add to NXP's adjusted operating profit in the quarter after the transaction closes.
Shares of Marvell rose 3.8% at $22.17, while those of NXP were down marginally. (Reporting by Sayanti Chakraborty and Supantha Mukherjee in Bengaluru; Editing by Shinjini Ganguli and Saumyadeb Chakrabarty)