Marvell Technology yesterday announced an agreement to buy Lumentum, a maker of optical components and lasers, in an all-stock deal valuing Lumentum at about $115 billion including debt. Other reports put the equity value lower, at about $100 billion to $102 billion. It is one of the largest chip deals ever.
The terms
Lumentum shareholders will receive 4.5 Marvell shares for each share, a premium of about 24% over the October 28 close, before rumors began. Marvell shareholders will own about 67% of the combined company. The companies expect more than $1 billion in annual synergies, and closing is not expected until the first half of 2028, subject to regulatory approval. If regulators block the deal, Marvell will pay a $3.2 billion termination fee.
The logic: light instead of electricity
As AI data centers grow, the bottleneck shifts from processors to the connections between them. Marvell specializes in chips for communication inside data centers, and Lumentum makes the lasers and optical components that carry data as light. Together they want to control the whole connectivity chain. It is the same field in which Israel's Tower posted a record this week thanks to silicon photonics.
Investors are skeptical
Marvell shares fell more than 10% on the day of the announcement, and Lumentum shares 15%. The all-stock structure exposes Lumentum holders to declines in Marvell's stock. And in the background, the market is already worried about high AI valuations.
