Marvell Technology has agreed to buy optical components maker Lumentum in an all-stock transaction valued at $115 billion.
The acquisition aims to strengthen the company’s position against rival Broadcom during an ongoing expansion in artificial intelligence infrastructure.
The agreement values Lumentum’s equity at $102.54 billion. Marvell will pay $1,132 per share in stock. That price offers a 23.9% premium over Lumentum’s closing stock price on October 28, before news of takeover talks emerged.
Under the terms, Lumentum stockholders will receive 4.5 Marvell shares for each share they hold. The arrangement gives them a 33% stake in the combined entity.
Marvell executives expect the purchase to expand their total addressable market to $550 billion. Both corporate boards approved the agreement unanimously. Executives expect the transaction to close in the first half of calendar 2028.
“AI infrastructure is undergoing a fundamental architectural shift toward optical connectivity, creating an opportunity that comes along once in a generation,” said Marvell CEO Matt Murphy.
Murphy will remain chairman and chief executive officer of the merged enterprise. The announcement comes as investors question the sustainability of heavy hardware spending.
Read: Stock Movers: SpaceX, Moderna Rise as Intel Falls
Lumentum shares fell more than 10% in early trading, while Marvell dropped over 5%. Analysts cited tightening corporate margins and slowing cash flows across the tech sector.
“Combining Marvell’s custom chips and networking expertise with Lumentum’s optical components could give it a much stronger hand,” said Axel Rudolph, chief technical analyst at IG Group.
Read: Stock Movers: SpaceX, Moderna Rise as Intel Falls
Rudolph added that investors naturally question whether Marvell is paying too much. Termination clauses require Marvell to pay $5.8 billion if its board abandons the deal.
Lumentum would owe $2.9 billion under similar circumstances. Regulatory rejection would cost Marvell $3.2 billion.
(With input from Reuters)
