Chipmaker Marvell buys optical tech firm Lumentum for $115B
What's the story
Custom chip designer Marvell has announced its acquisition of optical chip and networking equipment maker Lumentum. The all-stock deal, which has an enterprise value of $115 billion (including debt) and an equity value of $102.54 billion, is one of the biggest acquisitions in tech history. Under the terms of the agreement, Marvell will give 4.5 shares of its common stock for each share held by Lumentum's shareholders.
Strategic move
Marvell aims to become AI connectivity leader with Lumentum acquisition
The acquisition of Lumentum is a strategic move by Marvell to expand its AI connectivity business.
The company believes that the merger will make it a leader in AI connectivity, with products ranging from chips to data centers.
The deal is expected to close in the first half of 2028, subject to approval from shareholders and regulators of both companies.
Industry shift
Marvell's CEO highlights the significance of the AI connectivity shift
Marvell's CEO Matt Murphy, who will continue to lead the combined company as chairman and CEO, said, "AI infrastructure is undergoing a fundamental architectural shift toward optical connectivity."
He added that this presents a once-in-a-generation opportunity.
The deal comes as Marvell looks to challenge larger rival Broadcom and capitalize on the AI spending boom.
Financial growth
Marvell's market value soars amid AI chip demand and deals
Marvell's market value has skyrocketed to over $170 billion, thanks to its role in helping tech giants such as Amazon develop custom AI chips and networking technology for data centers.
The company also signed a deal with Google in August to supply chips worth up to $120 billion in sales through fiscal 2033.
At its investor day in October, Marvell projected fiscal 2031 sales of $70 billion-$90 billion.
Deal details
Deal terms and ownership structure post-merger
Under the terms of the deal, Marvell will pay $1,132 per share in stock, a 23.9% premium to Lumentum's last unaffected closing price on October 28.
This gives the deal an equity value of $102.54 billion and is expected to expand the combined company's total addressable market to $550 billion.
Lumentum shareholders will receive 4.5 Marvell shares for each share they own, giving them roughly 33% ownership of the combined company on a fully diluted basis.