Marvell to buy Lumentum in $115bn all-stock deal to dominate AI connectivity

Marvell Technology has agreed to buy Lumentum Holdings in an all-stock deal with an enterprise value of $115bn, one of the largest technology acquisitions ever, as it bets on the networking hardware that links artificial intelligence chips together.

The companies announced the deal on Monday, November 2.

The terms

Lumentum shareholders will receive 4.5 Marvell shares for each Lumentum share, worth about $1,132 per share at the time of the announcement, a premium of roughly 24 percent to the unaffected price on October 28. Because the deal is paid entirely in stock, its value moves with Marvell's share price.

After the deal, Marvell's existing shareholders will own about 67 percent of the combined company and Lumentum's about 33 percent. Bloomberg put the equity value at roughly $102.6bn.

The companies expect more than $1bn a year in cost savings and say the deal will add to Marvell's earnings in its first year. It is expected to close in the first half of 2028, subject to shareholder and regulatory approval.

Why AI connectivity matters

Training and running large AI models requires thousands of processors working together, and moving data between them quickly has become as important as the chips themselves. Marvell designs custom chips and networking silicon for data centres. Lumentum makes optical components and lasers used in the fibre-optic links that carry data between servers.

Together, the companies say they would address a market worth about $550bn, positioning themselves as a leading supplier of the "plumbing" behind AI data centres.

Investors are wary

The market reaction was negative. Marvell shares fell more than 10 percent on Monday, and Lumentum's also dropped, by around 15 percent according to some reports.

Investors may be worried about the price, the dilution of Marvell's shareholders and the long wait for approval. The deal also comes as investors grow more cautious about AI spending after a week in which some of the biggest technology companies were punished for heavy investment.

Regulators in the United States, Europe and China are likely to scrutinise a deal of this size in a strategically sensitive industry.