Marvell acquires Lumentum in second-largest-ever tech deal

Shares of Marvell Technology and Lumentum fell more than 10% after the announcement of the deal, valued at $115 billion implied enterprise value for Lumentum. The transaction, an all-stock acquisition, represents a price of $1,132 per Lumentum share and a 23.9% premium compared to their respective closing prices on October 28. Both US-based firms stated the acquisition aims to merge Marvell's expertise in electrical and optical interconnect, network switching, and advanced semiconductor technologies with Lumentum's proficiency in high-performance lasers, optical transceivers, optical circuit switching, and specialized compound semiconductor manufacturing.

Analysts view this as a strategic move to capitalize on the AI data centre boom. The deal is valued at 33x projected core operating profitability, more than double the industry median of 16x, according to Reuters calculations. It is reported as the second-largest tech transaction, following only the SpaceX-xAI merger. Marvell CEO Matt Murphy highlighted the shift in AI infrastructure toward optical connectivity, stating that the combination of the two companies will shape the next era of AI connectivity and create exceptional value for shareholders.

Upon completion, Marvell stockholders will own approximately 67% of the combined company, while Lumentum shareholders will hold about 33%, based on fully diluted shares.