A fixed ratio, not a fixed price
Marvell Technology and Lumentum said on 2 November that they have signed a definitive agreement for Marvell to buy Lumentum in an all-stock transaction. Lumentum shareholders will receive 4.500 Marvell shares for each Lumentum share they hold, which the companies said implies an enterprise value of $115 billion for Lumentum, or about $1,132 a share.
That is a premium of roughly 23.9% over each company’s closing price on 28 October, the last trading day before reports of a possible deal began to move the stocks. Because the exchange ratio is fixed and the consideration is Marvell paper, the dollar headline is not fixed: it rises and falls with Marvell’s share price. Marvell shares fell as much as 8% on Monday and Lumentum’s fell 12.5%, Reuters reported — so the deal was worth less by the close than the figure in the announcement.
What Marvell is buying
Lumentum makes high-performance lasers, optical transceivers and optical circuit switches, and runs its own compound semiconductor manufacturing, including indium phosphide. Marvell brings electrical and optical interconnect, network switching and custom accelerator silicon.
The companies’ argument is that copper has run out of room. The joint announcement says “the physical limitations of copper-based connectivity are accelerating the transition toward optical technologies”, and that AI systems are moving from discrete modules towards integrated optical parts designed alongside the electrical ones. Matt Murphy, Marvell’s chairman and chief executive, called it “an opportunity that comes along once in a generation”.
Marvell and Lumentum put the combined company’s addressable market at $550 billion. That is the companies’ own estimate, not an independent one.
Nothing closes until 2028
Both boards approved the agreement unanimously, but it is not expected to close until the first half of calendar 2028 — more than a year away. It needs approval from both sets of stockholders and from regulators, and Marvell said it will file a Form S-4 with the US Securities and Exchange Commission containing a joint proxy statement.
Marvell stockholders would own about 67% of the combined company on a fully diluted basis and Lumentum stockholders about 33%. Murphy stays on as chairman and chief executive. Three Lumentum directors, including chief executive Michael Hurlston, would join Marvell’s board, which currently has seven members.
The savings are projections
The companies say they have “line of sight” to more than $1 billion in annual run-rate cost synergies, and expect the deal to add to Marvell’s non-GAAP earnings per share in the first year after closing. Both are company forecasts about a transaction that has not happened, and neither has been tested by an outside party.
What to watch
Marvell also reported preliminary revenue for its third fiscal quarter of 2027 on Monday, keeping the midpoint of its earlier guidance while narrowing the expected range to plus or minus 2% from plus or minus 5%. Lumentum reported its first-quarter fiscal 2027 results separately.
The next concrete document is the Form S-4. Until it is filed and declared effective, the terms public investors have are the ones in Monday’s release — and the price on those terms will keep moving with Marvell’s share price for as long as the deal takes to close.
