Marvell has agreed to buy Lumentum in an all-stock deal that puts an implied enterprise value of $115 billion on the optical components maker, the companies announced on Monday.
Lumentum holders receive 4.5 Marvell shares for each of theirs, which the companies put at about $1,132 a share and a premium of roughly 23.9% to the 28 October close. Marvell holders will own about 67% of the combined company and Lumentum holders 33%.
Lumentum makes lasers and other optical parts used in AI data centres. Marvell says the combination widens its addressable market to $550 billion and expects more than $1 billion a year in cost savings.
Both boards have approved. Marvell chief executive Matt Murphy stays as chairman and chief executive, and three Lumentum directors, including its chief executive Michael Hurlston, join Marvell’s board.
The deal was widely expected. Bloomberg reported advanced talks on 28 October, and Marvell shares fell by more than 13% the next day, as investors worried about the premium, the new shares and regulatory scrutiny. CoinDesk notes neither stock moved much before Monday’s open.
Closing is subject to conditions, and the joint proxy statement goes out only after the SEC declares the registration statement effective. A Form S-4 has to be filed and made effective first, so shareholder votes are some way off.
Since the price is a share ratio, $115 billion is a figure for today. If Marvell’s stock keeps sliding, the value Lumentum holders are being paid shrinks with it, and the companies have not said what happens then.
