Google's Marvell Warrant Doesn't Fully Vest Until Google Buys $120 Billion of Chips
The chipmaker attached a stock award to its newest custom chip deal -- one installment for every $500 million its buyer spends. Collecting all of them takes 240.
Overview
Shares of chipmaker Marvell Technology (NASDAQ:MRVL) jumped about 10% Wednesday morning, as of this writing, after the company disclosed an expanded custom chip partnership with Google, the search giant owned by Alphabet (NASDAQ:GOOG)(NASDAQ:GOOGL).
Attached to the partnership is a warrant giving Google the right to buy 58,970,907 Marvell shares -- about $12.2 billion worth at the warrant's exercise price.
Details
The size of the award explains the pop. But to me, the more revealing part of the filing is the vesting schedule, which spells out exactly what Google has to do to earn those shares: buy chips. One installment of shares vests for every $500 million of revenue Marvell recognizes from Google and its affiliates for the custom products covered by the agreement. There are 240 installments in all.
Source
Originally published at www.fool.com.