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Marvell Buys Lumentum in $115B Stock Deal
2 Nov
Summary
- Marvell is acquiring Lumentum for $115 billion in an all-stock transaction.
- The deal will see Lumentum shareholders own approximately one-third of the combined entity.
- The acquisition is expected to significantly expand Marvell's presence in AI data centers.
Marvell Technology has agreed to acquire Lumentum, a key supplier of optical components for AI chips, in a $115 billion all-stock transaction. This major deal, announced on Monday, will result in Lumentum shareholders owning approximately one-third of the combined company. Marvell CEO Matt Murphy described the timing as "once in a generation," anticipating that the merged entity will set industry standards for decades.
The combination is projected to expand the companies' addressable market to $550 billion. Marvell aims for fiscal 2031 revenue between $70 billion and $90 billion, with earnings per share exceeding $30, a significant increase from its fiscal 2026 outlook of $3.07. The deal is expected to yield over $1 billion annually in cost savings.
Despite an initial 13% stock drop for Marvell upon news of the deal, long-term investors may benefit from buying into this significant AI bet at a reduced price. Marvell has secured future demand with a deal to supply chips alongside Google's AI processors, valued up to $120 billion through fiscal 2033.
The acquisition requires approval from shareholders of both companies and regulatory bodies, with an expected closing in the first half of 2028. Marvell's stock has experienced a sell-off amid broader chip market declines, but analysts from Stifel and Piper Sandler have maintained bullish ratings.
