Marvell’s $115 billion bet on AI’s laser links sent both companies’ shares tumbling
Marvell agreed to acquire Lumentum in an all-stock deal aimed at faster AI data-center connections, but shares in both companies fell sharply.
Marvell and Lumentum to Combine, Creating a Category Leader in AI Connectivity
Marvell doubles down on AI boom with costly $115 billion Lumentum deal
Marvell to buy Lumentum in all-stock deal
Driven by A.I. Boom, Marvell and Lumentum Announce $115 Billion Merger
Marvell to purchase Lumentum for $115 billion in record-breaking AI tech deal, both stocks tank
A costly bet on connectivity
Marvell Technology agreed on November 2 to buy optical-components maker Lumentum in an all-stock deal with an implied enterprise value of $115 billion, including debt. The proposed acquisition would bring Marvell’s data-center chips together with Lumentum’s lasers as AI systems demand faster connections between processors.investor +1
Investors sent both companies’ shares sharply lower on Monday. Reuters reported Marvell down more than 10% and Lumentum down over 15% during trading, as analysts questioned the price and the scale of the bet.reuters
Why light matters to AI
AI developers increasingly connect racks of specialized processors so they can work together on large computing tasks. Moving data between them quickly is essential: expensive chips can be held back if the connections feeding them become a bottleneck.reuters +1
Lumentum makes lasers and other components that transmit data using light. Optical links have long been used over long distances, but are moving closer to chips inside data centers, where they can help replace some copper connections. One emerging approach places optics close to processors in a configuration known as co-packaged optics.nytimes
Marvell designs networking and custom chips; Lumentum also brings optical transceivers and specialized manufacturing. The companies say combining these capabilities would let them design electrical and optical components together, with the goal of improving performance and power efficiency. Those benefits remain a projection, not a demonstrated result of the deal.investor
The price moves with the stock
Lumentum investors would receive 4.5 Marvell shares for each Lumentum share. Based on the companies’ unaffected October 28 closing prices, before deal speculation, the terms implied $1,132 per Lumentum share and a 23.9% premium. Lumentum shareholders would own about one-third of the combined company.investor
Because the exchange ratio is fixed and there is no cash payment, the offer’s value changes with Marvell’s share price. Yahoo Finance noted that Marvell’s decline had reduced the value of the implied payout.cnbc +1
A long road to closing
Marvell already bought optical-interconnect startup Celestial AI this year. Nvidia has invested in both Marvell and Lumentum, and Marvell CEO Matt Murphy told CNBC that bringing two suppliers together would support the chipmaker’s ecosystem.cnbc
The companies expect the deal to close in the first half of 2028, subject to shareholder and other required approvals. Until then, the proposed combination remains an agreement rather than a completed acquisition.investor