Marvell investors had grown hesitant the previous week. The deal terms are now public, showing exactly who is paying for it.
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Marvell shares fell 11.4% to $222.97 after reports that the chipmaker is close to a megadeal for Lumentum, though the stock is still up 162.82% year to date. The article's illustrative model puts the base case at $1,549.31 for a $1,000 investment by October 2030, with a bear case of $926.36 and a bull case of $2,095.58. Second-quarter fiscal 2027 revenue reached $2.74 billion, up 36.5%, and management expects fiscal 2027 revenue of roughly $12 billion, up approximately 45%. Risks include data center making up 79% of revenue, a concentrated group of hyperscaler customers, total debt of $4.96 billion, and Morningstar's warning that the Lumentum deal risks a steep overpay. The consensus analyst target is $341.44.
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Marvell (MRVL) fell nearly 37% over the past month and 29.4% over the past week after announcing an all-stock deal to buy Lumentum (LITE), a steeper drop than AI chip peers, whose monthly declines ranged from 6.48% to 23.66%. Investors disliked paying in stock because it dilutes existing holders, and Marvell carries $4.963 billion in long-term debt while still integrating Celestial AI and XConn Technologies. Several of the 47 analysts covering the stock have cut targets since the deal, with the average target at $333.09 against a price of $171.97. Piper Sandler kept its Overweight rating and $400 target, calling the selloff an overreaction and citing second-quarter fiscal 2027 revenue of $2.739 billion, up 36.5%. The article notes most targets were set before the deal, so the average could drift lower.
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According to TrendForce, the combined Marvell-Lumentum company would approach a 7% market share after the merger. That would place it behind only NVIDIA and Broadcom.
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Marvell Technology (MRVL) announced an all-stock deal to acquire photonics company Lumentum (LITE) at a $115 billion enterprise value, including debt. Nvidia's Jensen Wong endorsed the deal, but most analysts were skeptical, questioning the timing amid problems in the chip sector and the financing. Analysts noted both stocks have traded volatilely over the past month, which makes using shares as currency risky when closing could take a long time. Some argue Lumentum's management is admitting it may not be well positioned to execute alone over the next two to three years, while Marvell must show what its stock is worth as currency. Market reaction to the deal has been largely negative.
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Marvell agreed to buy Lumentum in an all-stock deal, and shares of both companies fell Monday. Shareholders of both companies have criticized the offer, with one describing it as “a trash offer.”
- In one of the largest deals in tech history, Marvell buys Lumentum for $115B
Marvell, a custom chip designer, will acquire Lumentum in an all-stock deal with an enterprise value of $115 billion including debt and an equity value of about $80 billion, offering 4.5 Marvell shares for each Lumentum share. The deal ranks among the largest in tech history, compared with Microsoft's $68.7 billion purchase of Activision Blizzard in 2022 and Dell's $67 billion acquisition of EMC in 2016. Nvidia is a shared major shareholder: it invested $2 billion in Lumentum in March under a multi-year laser component agreement, and later that month invested $2 billion in Marvell. The transaction is expected to close in the first half of calendar 2028, subject to shareholder and regulatory approval.
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