Marvell agrees to buy Lumentum in all-stock AI deal
Chipmaker Marvell Technology plans to buy optical parts maker Lumentum in an all-stock deal, CNBC and MarketWatch report. Marvell says the deal values Lumentum at $115 billion. Lumentum holders will get 4.5 Marvell shares for each share they own, and shares of the two companies fell in trading Monday.
Marvell Technology plans to buy Lumentum, which makes optical parts, in an all-stock deal, CNBC and MarketWatch report. Marvell said the deal gives Lumentum an implied enterprise value of $115 billion, CNBC reports.
Lumentum shareholders will receive 4.5 Marvell shares for each Lumentum share, CNBC reports. Because the deal uses a fixed ratio and no cash, its value will depend on Marvell's share price, CNBC says. MarketWatch says the offer is a 24% premium to Lumentum's closing price on October 28, before Bloomberg News reported on the talks.
Marvell shareholders will own about two-thirds of the combined company, MarketWatch reports. The deal needs approval from shareholders and regulators and is expected to close in the first half of 2028, MarketWatch says.
Optical technology has become key to moving AI data at high speeds. The two companies say that market could be worth $550 billion, MarketWatch reports. "You need scale-up technology that needs semiconductors and optical working seamlessly together," Marvell CEO Matt Murphy said on CNBC. Murphy also called the deal "a double down on supporting Nvidia," CNBC reports.
In trading Monday, Marvell shares were down 8% and Lumentum shares were down 13%, CNBC reported. Those were figures from during the trading day, not closing prices.
Some experts see echoes of the dot-com era, MarketWatch reports. In 1999, JDS Fitel and Uniphase merged in a deal paid for with stock, and shareholders lost value when the bubble burst, MarketWatch says. Lumentum came out of a 2015 split of JDS Uniphase, MarketWatch says. "There's a real echo of 2000 here," said Anup Srivastava, an accounting professor at the University of Calgary, according to MarketWatch.
Srivastava also said the "strategic logic is real," because Lumentum fills the biggest gap in what Marvell sells, MarketWatch reports.
What we know: Marvell plans to buy Lumentum with stock, in a deal expected to close in 2028.
What we don't: Whether regulators and shareholders will approve it, and what the deal will be worth when it closes.
Where outlets agree CNBC and MarketWatch agree that Marvell will pay for Lumentum in stock, in a deal that values Lumentum at $115 billion and is expected to close in the first half of 2028.
Where they differ The cited reports agree on the key facts so far.