A deepening selloff in Marvell and Lumentum shares cut the implied enterprise value of their all stock merger to $54 billion by Wednesday, down from $115 billion when the deal was announced Monday. Because the agreement locks in a fixed exchange ratio of 4.5 Marvell shares for each Lumentum share without a cash component or price collar, a 29% slide in Marvell stock and a drop of more than 30% in Lumentum over the past week have dragged the takeover value down alongside the acquirer’s equity. By Tuesday morning, the offer valued Lumentum at $839 a share, compared with $1,132 based on Oct 28 closing prices.
The stock slide continued even after reports that Marvell CEO Matt Murphy and Lumentum CEO Michael Hurlston consulted Nvidia CEO Jensen Huang and received his blessing before announcing the tie up. Nvidia invested $2 billion in each company in March, and Lumentum’s indium phosphide lasers supply Nvidia’s optical switches under contracts running through 2029. “I think the reaction from Nvidia has been super positive,” Hurlston said Tuesday. “We think we can actually bring a lot more product to bear to Nvidia a lot more quickly in this combination.”
Beyond the equity dilution, the transaction faces regulatory review in China before its scheduled close in the first half of 2028, with Marvell on the hook for a $3.2 billion breakup fee if antitrust authorities block the merger. Combining Marvell’s optical digital signal processors and custom silicon with Lumentum’s lasers and optical switches will also require fabless chipmaker Marvell to run internal indium phosphide fabrication plants for the first time, including a planned US 6 inch production ramp in mid 2028 and an $87 million substrate capacity reservation agreement with AXT.
