TLDR
- Marvell will buy Lumentum in an all-stock deal valued at $115 billion.
- Marvell stock closed Friday at $196.40, down 10.05%, and was at $197.50 pre-market.
- Lumentum holders get a 23.9% premium at a fixed 4.500 exchange ratio.
- Marvell expects over $1 billion in annual cost synergies.
- The deal is expected to close in the first half of 2028.
Marvell Technology (MRVL) agreed to buy Lumentum (LITE) in an all-stock deal valued at $115 billion. The announcement came Monday.
Marvell Technology, Inc., MRVL
Marvell stock closed Friday at $196.40, down $21.94, or 10.05%. It was up 0.56% at $197.50 in pre-market trading Monday.
Lumentum stock fell 8.57% in the same session. Since talks were first reported late last month, it has dropped about 8%, while Marvell is down about 22%.
A broad chip selloff sped up after Intelās weak forecast. Both stocks moved lower with the group.
Why Marvell Wants Lumentum
Marvell says the deal lifts its total addressable market to $550 billion. It also expects the deal to add to non-GAAP earnings per share in the first year after closing.
The company sees a line of sight to more than $1 billion in annual run-rate cost synergies. It also expects better long-term revenue growth and margins.
CEO Matt Murphy called the move to optical connectivity āan opportunity that comes along once in a generation.ā Lumentum CEO Michael Hurlston said the pairing lets the two firms meet customersā full interconnect needs.
Lumentum is about half the size of Marvell. Nvidia invested $2 billion in each company earlier this year.
Lumentum competes with Coherent and Chinaās Zhongji Innolight. It could also gain from a proposed US ban on new Chinese optical transceivers.
This is Marvellās largest purchase since its $10 billion Inphi buyout in 2021. In February, it closed a $3.5 billion deal for Celestial AI.
Marvell stock hit a record high in June after Nvidia CEO Jensen Huang called it the next ātrillion-dollar company.ā Annual revenue rose from $3 billion in fiscal 2021 to $8.2 billion in fiscal 2026.
In August, Marvell signed a deal worth up to $120 billion in sales through fiscal 2033. It covers chips that sit alongside Googleās AI processors.
Deal Terms
Lumentum holders will receive Marvell common stock at a fixed exchange ratio of 4.500 for each Lumentum. That implies about $1,132 per Lumentum.
The price is a premium of about 23.9% to the unaffected close on October 28. That was the last trading day before deal speculation began.
After closing, current Marvell holders will own about 67% of the combined company. Lumentum holders will own the other 33%.
Both boards approved the deal unanimously. Murphy will stay on as Chairman and CEO.
Three Lumentum directors, including Hurlston, will join Marvellās seven-member board. Closing needs approval from stockholders of both companies and from regulators.
The deal is expected to close in the first half of calendar 2028.
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