Marvell Technology, a chip designer, and Lumentum said on Monday, Nov. 2, that Marvell has agreed to buy Lumentum, a maker of lasers and other light-based parts. Marvell will pay in its own shares, not cash, in a deal the companies valued at $115 billion, or about $1,132 for each Lumentum share, based on both companies' share prices on Oct. 28. That is about 23.9% above Lumentum's closing price that day, the last trading day before talk of a possible deal began, the companies say.
The deal is a bet on how AI data centers will be wired. Training and running AI takes many chips that pass data to one another. The companies say copper wire is reaching its physical limits as those links need to carry more and more data, so data centers are moving to optical links, which carry data as light. Lumentum makes lasers and some of the plug-in modules that turn electrical signals into light and back, while Marvell designs chips that carry and route data along those links, along with custom chips built for AI. Together, the companies say, they expect to design the electrical and light-based parts as one system and get products to customers faster. Marvell's chief executive, Matt Murphy, called the move to optical links "an opportunity that comes along once in a generation."
Lumentum shareholders will get 4.5 Marvell shares for each share they own. Because that number is fixed, the deal's value in dollars will rise and fall with Marvell's share price until the deal closes. Afterward, today's Marvell shareholders would own about 67% of the combined company and Lumentum's shareholders about 33%. Murphy, who is also Marvell's chairman, would keep both jobs at the combined company, and three of Lumentum's directors, including its chief executive, Michael Hurlston, would join Marvell's board.
Both boards have approved the deal unanimously, but it still needs votes from both companies' shareholders and approval from regulators. The companies expect it to close in the first half of 2028, more than a year away. They also expect the deal to eventually cut costs by more than $1 billion a year, and say the combined company could sell into a market they expect to be worth $550 billion by 2030. Both figures are the companies' own forecasts.
The deal needs a U.S. antitrust review, plus other approvals from regulators that the companies have not named. The companies say the savings would come mostly from the cost of making their products, and they have not said whether any jobs would go.