Marvell Technology has agreed to acquire optical components manufacturer Lumentum in an all-stock transaction valued at approximately $115 billion, including debt, as the semiconductor company looks to expand its presence in the artificial intelligence data centre market.
The proposed acquisition will bring together Marvell's semiconductor and networking technologies with Lumentum's optical connectivity products, which are used to transmit data across high-performance computing infrastructure.
Under the agreement, Lumentum shareholders will receive 4.5 shares of Marvell common stock for every Lumentum share they own. The transaction values Lumentum's equity at approximately $102.5 billion.
The offer represents a premium of around 23.9 per cent over Lumentum's closing share price on October 28, before reports of a potential acquisition emerged.
Following completion of the transaction, existing Marvell shareholders are expected to hold approximately 67 per cent of the combined company, while Lumentum shareholders will own the remaining 33 per cent.
Marvell Chairman and CEO Matt Murphy will continue to lead the combined business.
The acquisition comes as technology companies increase investment in AI infrastructure, creating demand for faster and more efficient communication between processors, servers and data centres.
AI workloads often require thousands of computing units to exchange large volumes of information. Optical networking technologies enable data transmission through light-based connections and are increasingly being adopted to address bandwidth and power limitations associated with conventional copper-based systems.
By integrating Lumentum's optical technologies with its existing semiconductor portfolio, Marvell intends to expand its capabilities in data centre connectivity and compete more directly with larger industry players, including Broadcom.
Marvell expects the combined company to generate more than $21 billion in annual revenue, with adjusted operating margins in the low 40 per cent range, based on its near-term financial projections.
The transaction also brings together two companies that received investments from Nvidia earlier in 2026. Nvidia invested $2 billion in each business as part of its broader engagement with companies developing AI infrastructure technologies.
Despite the projected benefits, the announcement prompted a negative response from investors. Marvell shares declined by more than 10 per cent, while Lumentum shares fell over 15 per cent following the announcement.
The share price movements reflected investor concerns about the acquisition's valuation, potential financing risks and the scale of spending associated with expanding AI infrastructure.
The transaction is expected to close during the first half of 2028, subject to shareholder approvals, regulatory clearances and other customary closing conditions.
The agreement also includes termination fee provisions under specified circumstances.
If completed, the acquisition would expand Marvell's position in optical connectivity and increase its exposure to spending on AI data centre infrastructure.
However, the anticipated financial benefits and integration outcomes remain dependent on the transaction receiving the necessary approvals and the companies meeting their projected business targets.
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