Marvell to Acquire Lumentum in $115 Billion All-Stock Deal Aimed at AI Connectivity

Under the terms, Lumentum shareholders will receive 4.5 Marvell shares for each Lumentum share. According to the announcement as reported by Investing.com, that works out to about $1,132 per Lumentum share, a premium of roughly 23.9% to Lumentum's closing price on October 28, the last trading day before market speculation about a deal began. There is no cash component, and because the exchange ratio is fixed, the value of the transaction will rise and fall with Marvell's share price.

Once the deal closes, current Marvell shareholders will own about 67% of the combined company on a fully diluted basis and Lumentum shareholders about 33%. Both boards approved the deal unanimously. Matt Murphy will remain chairman and chief executive, and three Lumentum directors, including chief executive Michael Hurlston, will join Marvell's board, which currently has seven members.

Marvell said it has "line of sight to more than $1 billion in annual run-rate cost synergies" and expects the deal to add to its non-GAAP earnings per share in the first year after closing. The companies put the combined addressable market at $550 billion. Closing is expected in the first half of calendar 2028 and requires approval from both companies' shareholders as well as regulators. The companies have not said which regulators will review the deal.

Why Optics Matter for AI

Training and running large language models means linking thousands of accelerators across racks and buildings. As those clusters grow, copper connections reach their limits on distance and power, and more of the traffic moves onto optical links built from lasers and transceivers, which is Lumentum's core business. Marvell already sells custom chips and electrical interconnect technology to the largest cloud providers, and earlier this year it closed the acquisition of Celestial AI, an optical interconnect start-up.

Murphy told CNBC that the companies' products are sold out because "the demand is exploding, and we don't see that changing anytime soon." He said the deal would "create a new category of company." Nvidia has invested in both companies, and Murphy described the combination as "a double down on supporting Nvidia, who is the ecosystem leader in this area." Hurlston called the opportunity "enormous," CNBC reported.

Investors Push Back

Markets reacted coldly. Marvell shares fell about 13% on Monday and Lumentum's dropped nearly 19%, according to CNBC. Both stocks had risen sharply before the announcement: Marvell had more than doubled over the past year and Lumentum had roughly quadrupled, with its shares more than doubling in 2026 alone. The fall came during a wider sell-off in AI-linked stocks, with the Nasdaq-100 closing more than 10% below its October 6 record on Monday.

The deal also has a long road to completion. A closing date roughly 18 months away leaves time for shifts in AI spending and in the shares of both companies, and for scrutiny from competition authorities in several jurisdictions, given how central both companies have become to data centre supply chains.

For cloud providers and sovereign AI projects, including the large campuses planned in the Gulf, the deal is a sign that networking hardware is now a strategic bottleneck alongside GPUs and memory. Suppliers are consolidating to offer more of the connectivity stack from a single vendor. Marvell was advised by Qatalyst Partners, J.P. Morgan Securities and Goldman Sachs, and Lumentum by Citigroup Global Markets and Evercore.