Marvell Agrees to Buy Lumentum in US$115 Billion All-Stock Deal to Expand in AI Optical Networking

Marvell Technology has agreed to acquire optical components maker Lumentum in an all-stock transaction that gives the target an implied enterprise value of about US$115 billion, Investing.com reported on Monday, as the US chipmaker moves to deepen its position in optical networking for artificial intelligence infrastructure.

According to TheStreet, the deal is Marvell’s largest acquisition since its US$10 billion purchase of Inphi in 2021.

Deal terms

Lumentum shareholders will receive 4.5 Marvell shares for each share they hold, worth roughly US$1,132 per share at the time of the announcement. That represented a premium of about 23.9% to both companies’ closing prices on October 28, which the companies described as the last trading day before speculation about a deal emerged.

Once the deal is completed, Marvell investors will own about 67% of the combined company on a fully diluted basis, with Lumentum investors holding the remaining 33%. The boards of both companies approved the transaction unanimously. Matt Murphy will stay on as Marvell’s chairman and chief executive, while three Lumentum directors, including Lumentum CEO Michael Hurlston, will join Marvell’s board.

The companies expect more than US$1 billion in annual run-rate cost savings and said the deal should add to Marvell’s non-GAAP earnings per share in the first year after closing. Yahoo Finance noted that the combination would bring together Marvell’s semiconductor technologies with Lumentum’s optical components and systems businesses, and that no detailed timetable for the savings has been given.

Lumentum results beat estimates

Alongside the deal, Lumentum reported fiscal first-quarter 2027 revenue of US$1.26 billion, up from US$533.8 million a year earlier. Adjusted earnings came to US$4.57 per share, compared with US$1.10 a year ago and analysts’ expectations of US$4.21.

For the second quarter, Lumentum guided for revenue of US$1.575 billion to US$1.625 billion, above the US$1.48 billion consensus, and adjusted earnings of US$5.90 to US$6.20 per share against expectations of US$5.07. Hurlston said the company “built on its strong momentum in the first fiscal quarter of 2027.”

Marvell said its preliminary fiscal third-quarter revenue is in line with its guidance, and narrowed the range to plus or minus 2% from plus or minus 5%, keeping the midpoint unchanged.

Shares reverse early gains

Both stocks rose in early pre-market trading, with Lumentum up 2.5% and Marvell up 3.4%, according to Investing.com. The gains faded once regular trading began. TheStreet reported Lumentum down 14.07% and Marvell down 8.73% at 12:28 p.m. New York time. StockTitan said the slide in Marvell’s shares had cut the value of the offer to about US$829 per Lumentum share by late morning.

The deal comes as markets attempt to recover from what Capital.com senior market analyst Daniela Hathorn, quoted by TheStreet, called a difficult October dominated by technology weakness and concerns about AI investment.

What’s next

The transaction requires approval from shareholders and regulators, along with other customary closing conditions. The companies expect it to close in the first half of 2028.

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