Marvell Technology Inc. agreed to buy Lumentum Holdings Inc. at an enterprise value of $115 billion, clinching one of the largest technology deals in history in a push to capitalize on runaway data center spending.
Marvell shareholders will get 67% of the combined business in an all-stock transaction that values the equity at roughly $102.6 billion. The merger is expected to be completed in the first half of 2028, the companies said, confirming a tie-up that was first reported by Bloomberg News.
The deal is Marvell’s boldest bet yet to recast itself as a star of the artificial intelligence industry. The company already designs chips used in ever-growing AI infrastructure. With Lumentum, it will have components that use light to speed information around data centers.
Still, the merger immediately sparked concerns from investors, who sent shares of both companies sliding on Monday. Embarking on a massive AI deal at a time when the market is jittery about the industry could be a risky proposition. Analysts also don’t see much cost-cutting potential between the two businesses’ operations. Moreover, the 2028 goal for completing the tie-up suggests that gaining clearance won’t be easy.
The Lumentum acquisition is the top M&A deal of the year on an equity basis, according to data compiled by Bloomberg. And it’s second only to the SpaceX-xAI merger as the largest tech transaction ever.
The transaction shows how AI is driving deals across almost all major sectors and regions, from the chip industry to data center operations to power utilities.
“Marvell has been on a decade-long journey to build a strong position in the core technologies powering the AI industry,” Marvell Chief Executive Officer Matt Murphy said during a conference call Monday. “This transaction marks a defining next step in that journey.”
The agreement follows a rocky week for the tech industry, with stocks getting hammered over concerns that a spending bubble will pop. Shares of both Marvell and Lumentum tumbled at the end of last week — and the declines extended into Monday, a sign investors weren’t happy with terms of the merger.
Lumentum shares fell 19% to $684.40 in New York, while Marvell declined 13% to $171.41. Lumentum had been valued at $76 billion as of Friday, with Marvell’s market capitalization standing at $172.2 billion.
Lumentum makes lasers and other optical technology for moving enormous amounts of data at high speeds. That hardware underpins the AI boom, as it lets data centers and telecommunications firms move information between servers, facilities and other destinations.
Marvell already buys laser technology from Lumentum, and the larger company has been increasing its bets on optical and photonic technology for connecting data center gear. Earlier this year, Marvell purchased photonics maker Celestial AI.
Nvidia Corp., the world’s largest chipmaker, announced an agreement to take a $2 billion stake in Lumentum in March. That pact included plans to collaborate on photonics, which use light instead of traditional copper wiring to move data faster and more efficiently.
Marvell, meanwhile, works with the cloud-computing operations of Amazon.com Inc. and Microsoft Corp. to help build custom AI chips. In August, the company struck a chip deal with Alphabet Inc.’s Google to support Google’s tensor processing units.
Qatalyst Partners is serving as the lead financial adviser to Marvell, with Goldman Sachs Group Inc. and JPMorgan Chase & Co. also working with the company. Citigroup Inc. and Evercore Inc. are advising Lumentum.
Gould, Davis and Carnevali write for Bloomberg.
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