Marvell to Acquire Lumentum in $115 Billion All-Stock Deal for AI Connectivity
U.S. chipmaker Marvell Technology has reached a definitive agreement to acquire optical networking technologies company Lumentum in an all-stock transaction valued at approximately $115 billion in enterprise value.
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Marvell Technology announced it has agreed to acquire Lumentum, a provider of optical networking technologies, for an approximate enterprise value of $115 billion in an all-stock deal. Under the terms of the agreement, Lumentum shareholders will receive 4.5 shares of Marvell common stock for each Lumentum common share they hold. This exchange ratio implies a value of $1132 per Lumentum share, representing a 23.9% premium over its closing price on October 28.
Upon completion of the acquisition, current Marvell shareholders are expected to own approximately 67% of the combined company's capital, while Lumentum shareholders will own about 33%. The boards of directors of both companies have unanimously approved the agreement. The transaction is anticipated to close in the first half of 2028, subject to shareholder and regulatory approvals.
The acquisition is positioned as a significant bet on the escalating connectivity demands driven by artificial intelligence (AI) infrastructure. Marvell CEO Matt Murphy stated that AI infrastructure is undergoing a fundamental architectural shift towards optical connectivity, and the combined entity aims to shape the future of AI connectivity by integrating their complementary technologies. Lumentum CEO Michael Hurlston described the merger as an "enormous" opportunity, positioning the company to capitalize on a $550 billion market.
The merger will combine Marvell's expertise in electrical and optical connectivity, network switching, and custom chip technologies with Lumentum's high-performance lasers, optical transceivers, and optical circuit switching capabilities. This integration is expected to support long-term revenue growth and profit margins for the companies. Additionally, the deal is projected to generate over $1 billion in annual cost synergies.
Following the announcement, Marvell shares declined by 13% and Lumentum's stock fell by nearly 19% in market trading. However, both companies' shares had previously seen substantial gains, benefiting significantly from the boom in the artificial intelligence sector.