Marvell Technologies to acquire Lumentum in $115 billion AI deal
Marvell Technologies, a semiconductor maker, plans to buy Lumentum in a $115 billion stock deal. The buyout brings together major AI suppliers backed by Nvidia, which makes processors powering the artificial intelligence boom.
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Semiconductor maker Marvell Technologies has announced plans to acquire fellow California company Lumentum in an all-stock transaction worth an estimated $115 billion. According to CNBC analysts, this is one of the most significant bets on artificial intelligence of the year. Marvell is interested in Lumentum’s optical connectivity technology, which helps connect together the chips used to run and train large language model products like ChatGPT, Gemini, and Claude.
Lumentum shareholders will receive 4.5 Marvell shares for every share of Lumentum. The deal is not expected to close until 2028, and the exact final value will depend on the price of Marvell shares at the time the purchase goes through. Markets did not react well to the news, as Marvell shares cratered 13 percent and Lumentum shares dropped by almost 19 percent.
According to reporting in the Motley Fool, investors likely think Marvell overpaid, especially since Lumentum shares had skyrocketed by more than 450 percent in the past year on AI hype. Both companies share an important major investor in computing giant Nvidia, which makes processors that go in the computers driving the AI revolution and sank $2 billion into each company earlier this year.
Back in June, Nvidia CEO Jensen Huang named Marvell as the next trillion-dollar company during a keynote address in Taiwan, praising the firm as essential. Marvell currently has a market capitalization of $150 billion. Huang added that interconnection, which Marvell and Lumentum specialize in, stands to be the next phase in the artificial intelligence development blitz.
