Marvell, Lumentum drop after $115 billion deal stokes investor unease
MRVL•Marvell shares fell 4.6% and Lumentum shares fell 9.5% after Marvell agreed to buy Lumentum in an all-stock deal valued at $115 billion including debt. Investors have raised concerns about the deal’s all-stock structure and the combined company’s relationships with competing investors.
1. Shares fall after deal
Marvell shares fell 4.6% to $187.33, their lowest level since August, while Lumentum shares slipped 9.5% to $760. Marvell agreed to acquire Lumentum in an all-stock transaction valued at $115 billion including debt, paying $1,132 per share—a 23.9% premium to Lumentum’s last unaffected closing price on October 28.
2. Investor concerns
The all-stock structure exposes Lumentum investors to fluctuations in Marvell shares, which have lost around 27% since deal talks were reported. Concerns about AI spending have weighed on both stocks. TD Cowen analysts raised questions about how the combined company would manage relationships with competing investors and what it could offer that the companies could not deliver independently.
3. Termination fees
Marvell would owe Lumentum a $5.8 billion termination fee if its board withdraws support or it walks away for a rival bid; Lumentum would owe Marvell $2.9 billion in similar circumstances. As of the last close, both companies’ shares had more than doubled year to date.
