Marvell agrees to buy Lumentum to build optical links for AI data centres
All-stock deal at an implied enterprise value of $115bn: 4.500 Marvell shares per Lumentum share, a 23.9% premium, with closing expected in the first half of 2028.
- Money & business
- Compute & infrastructure
- Notable
Marvell Technology announced on 2 November that it would acquire Lumentum, a maker of lasers and optical components, in an all-stock transaction. In its press release, Marvell said both boards had approved the deal unanimously.
The terms are a fixed exchange ratio of 4.500 Marvell shares for each Lumentum share, which Marvell put at about $1,132 a share and an implied enterprise value of $115bn. It described that as a premium of about 23.9% to each company’s closing price on 28 October, the last trading day before deal speculation began. Marvell shareholders would own about 67% of the combined company on a fully diluted basis and Lumentum shareholders about 33%. Closing is expected in the first half of calendar 2028, subject to approval by both companies’ shareholders and by regulators.
Lumentum’s products, as the release describes them, are high-performance lasers, optical transceivers and modules, optical circuit switches, and the compound-semiconductor manufacturing, including indium phosphide, that supports them. Marvell’s rationale was that AI infrastructure is moving toward optical connectivity. Chairman and chief executive Matt Murphy said the combination would give the company a position in what it called a $550bn addressable market, a figure that is the companies’ own estimate. Marvell also said it saw more than $1bn of annual run-rate cost savings and expected the deal to add to its non-GAAP earnings per share in the first year after closing. Murphy would remain chairman and chief executive, and three Lumentum directors, including its chief executive Michael Hurlston, would join Marvell’s seven-member board.
Because the exchange ratio is fixed, the value of the offer will move with Marvell’s share price until completion, which the release puts more than a year away.
The deal is a bet on the networking layer of AI data centres, the links between chips, racks and buildings, rather than on processors or models. It came in the week after the big-tech earnings reports renewed questions about how the largest buyers of AI hardware would pay for it.