Shares in Marvell Technology and Lumentum fell sharply Monday after Marvell announced a proposed $115 billion all-stock acquisition of the optical-components company, a giant bet on future spending for artificial-intelligence data centers.
The Associated Press reported that Marvell shares slid about 13.9% and Lumentum dropped 17.7% during the session. The market reaction underscored investors' unease about the purchase price and the financial demands of expanding the infrastructure used to power AI services.
Under the definitive agreement announced November 2, Lumentum shareholders would receive 4.5 shares of Marvell for each Lumentum share. That exchange ratio values the transaction at approximately $115 billion including assumed debt, according to the companies' filing with the Securities and Exchange Commission.
Marvell investors would own about 67% of the combined company after the merger, with Lumentum shareholders holding the other 33%. The companies expect the deal to close during the first half of 2028, subject to shareholder votes, regulatory review and other conditions.
The combination would bring together Marvell's chips and networking systems with Lumentum's optical components, which help move data quickly among the powerful processors inside modern AI facilities. Optical links are becoming important as data-center operators connect more chips and seek to reduce power and communication bottlenecks.
Marvell said the transaction could generate more than $1 billion in annual cost savings over time and expand its long-term addressable market. Those are company projections, not achieved results.
Reuters reported that the acquisition price looks steep relative to the target's expected operating profits. Investors are also questioning whether AI data-center expansion will be sustained long enough to justify the capital required.
Marvell chairman and chief executive Matt Murphy is expected to lead the combined business. The definitive agreement does not guarantee completion; financing, regulatory scrutiny and broader shifts in AI spending remain important risks.
Sources: - Marvell and Lumentum joint acquisition announcement, SEC exhibit, Nov. 2 - Reuters, Marvell $115 billion Lumentum deal, Nov. 2 - Associated Press, closing market report, Nov. 2