Marvell to buy Lumentum in $115 billion deal, betting big on AI data-centre optics

Chipmaker Marvell announced on November 2 that it has reached a definitive agreement to acquire optical components maker Lumentum in an all-stock transaction, with an implied enterprise value of about $115 billion for Lumentum. The companies said the combination would create a leader in connectivity for AI data centres.

Deal terms

Under the agreement, Lumentum shareholders will receive 4.500 shares of Marvell common stock for each Lumentum share they own, implying about $1,132 per Lumentum share — a premium of about 23.9% over each company's unaffected closing price on October 28, the last trading day before market speculation about a deal began. After closing, current Marvell shareholders will own about 67% of the combined company and Lumentum shareholders about 33%. Both boards have unanimously approved the deal.

Marvell chairman and CEO Matt Murphy will continue to lead the combined company, and three Lumentum directors, including president and CEO Michael Hurlston, will join Marvell's board. The deal is expected to close in the first half of 2028, subject to shareholder approvals, regulatory clearances and customary closing conditions.

Why optics

Inside AI data centres, thousands of chips must be linked at very high speed, and fibre-optic links are displacing some traditional copper connections. Marvell brings custom AI chips, network switching and electrical interconnect technology; Lumentum brings high-performance lasers, optical transceivers and optical circuit switching. Together, the companies aim to offer a fuller connectivity package from chip to fibre. Marvell put the combined company's total addressable market at about $550 billion and said it sees more than $1 billion in annual run-rate cost synergies.

Market reaction and context

Marvell shares rose about 2.8% in premarket trading after the announcement, while trading in Lumentum shares was halted. It is Marvell's largest acquisition since its $10 billion purchase of Inphi in 2021; Reuters noted that Nvidia invested $2 billion in each of Marvell and Lumentum earlier this year. Lumentum also reported first-quarter revenue of $1.26 billion, slightly above consensus estimates.

The deal is an announced agreement, not a completed transaction, and the long road to a 2028 closing leaves regulatory and execution risks ahead. The companies expect the deal to add to Marvell's non-GAAP earnings per share in the first year after closing. (File photo: data centre illustration)