Marvell Technology agreed on Monday, November 2, to buy optical parts maker Lumentum in an all-stock deal valued at 115 billion dollars. Shares of both companies fell at the open, Marvell by 6.4 percent and Lumentum by 10.3 percent.
Photo: Serey Image Service
The terms
Lumentum shareholders will receive 4.5 Marvell shares for each share they own. At signing, that worked out to about 1,132 dollars per Lumentum share, a premium of roughly 23.9 percent over the price on Wednesday, October 28, the last trading day before talk of a deal began. The 115 billion dollars is the implied enterprise value, meaning the price for the whole business including its debt.
Because no cash changes hands, the real value of the deal moves with Marvell's share price. When Marvell falls, as it did on Monday, Lumentum holders are in line for less. After closing, Marvell shareholders would own about 67 percent of the combined company and Lumentum shareholders about 33 percent.
Matt Murphy stays on as chairman and CEO. Three Lumentum directors, including CEO Michael Hurlston, will join Marvell's seven-member board. Both boards approved the deal unanimously, but it still needs shareholder and regulatory approval and is expected to close in the first half of 2028.
Why Marvell wants it
Marvell designs custom chips and the electrical links that tie AI systems together. Lumentum makes the lasers and optical parts that move data as light between servers. AI data centers lean more and more on optical links to connect large numbers of chips.
“AI infrastructure is undergoing a fundamental architectural shift toward optical connectivity, creating an opportunity that comes along once in a generation,” Murphy said in the companies' statement. Marvell says the combination raises its total addressable market to 550 billion dollars and should bring more than 1 billion dollars a year in cost savings. It also expects the deal to add to its adjusted earnings per share in the first year after closing.
CNBC called the deal one of the most significant AI bets of 2026. It comes even as investors worry about how long the boom in AI infrastructure spending can last. Marvell's market value has more than tripled over three years, and Lumentum's stock had more than doubled this year.
The wider market
Stocks rose after a weak October as oil dropped about 6 percent on hopes of peace talks with Iran. The S&P 500 gained 0.8 percent to 7,640.8 and the Nasdaq Composite added 1.1 percent to 25,705.7. Amazon climbed 4.7 percent. This article is for information only and is not investment advice.
Is Marvell buying at the top of the AI boom, or right on time?
0.00 SRY