(Reuters) - Chipmaker Marvell Technology Group Ltd MRVL.O said on Monday it would buy smaller rival Cavium Inc CAVM.O for about $6 billion, as it seeks to expand its wireless connectivity business in a rapidly consolidating semiconductor industry.

Shares of Marvell were down 0.8 percent to $20.14, while Cavium was up 7 percent at $81.14 in early trading.

Chief Executive Matthew Murphy, who took the top job a year ago, has been focusing on Marvell’s networking business to counteract declining demand for its chips used in hard disk drives of personal computers.

Murphy last year replaced former CEO Sehat Sutardja and President Weili Dai - a husband-wife team who co-founded the company - after an audit committee questioned their management style and hedge fund investor Starboard Value LP made a host of demands.

Analysts say the new leadership is preparing a number of important new product launches for later this year after refreshing 25 products in 18 months.

The deal is Murphy’s first acquisition at the company.

“With Marvell facing secular challenges on its core chip business, this acquisition is a smart strategic move which puts the company in a stronger competitive position for the coming years,” said GBH Insights analyst Daniel Ives.

A buyout of Cavium would give a boost to the networking ambitions of Marvell, which has clients such as network giants Cisco Systems Inc CSCO.O and Juniper Networks JNPR.N.

Marvell and Cavium combined would be able to better compete with bigger rivals Intel Corp INTC.O, Qualcomm QCOM.O and Broadcom AVGO.O, Stifel analyst Kevin Cassidy said.

In the last two years, the chip industry has witnessed a series of deals as companies try to gain market share in emerging areas such as automotive technologies and connectivity.

The most recent is a bid by Wi-Fi chipmaker Broadcom for rival Qualcomm for a whopping $103 billion in what could be one of the biggest technology deals ever.

Marvell’s offer of $84.15 - based on the stock’s close on Friday - represents a premium of 11 percent to San Jose, California-based Cavium’s close, according to a Reuters calculation.

Marvell will offer $40 per share in cash and 2.1757 of its shares for each Cavium share.

The exchange ratio was based on a purchase price of $80 per share, Marvell’s share price prior to the first media report of the transaction on Nov. 3.

The chipmaker plans to fund the deal with a combination of cash on hand from the combined companies and $1.75 billion in debt financing, the company said.

Goldman Sachs & Co LLC was the financial adviser to Marvell, while Qatalyst Partners LP and J.P. Morgan Securities LLC were the financial advisers to Cavium.