Marvell to Acquire Lumentum in $80 Billion All-Stock Deal

Marvell has agreed to acquire Lumentum in a transaction valued at approximately 80,000,000,000 USD, according to a report by The Wall Street Journal. The deal, announced on Monday, will be funded entirely through stock, with Lumentum shareholders receiving 4.5 shares of Marvell for each ordinary share of Lumentum they hold. When debt obligations are included, the total enterprise value of the transaction is estimated at approximately 115,000,000,000 USD. At the time of the announcement, the market capitalization of Lumentum stood at roughly 76,000,000,000 USD, while Marvell’s market value was approximately 172,000,000,000 USD.

The acquisition is designed to combine two of the fastest-growing suppliers of artificial intelligence infrastructure. Marvell develops specialized chips and controllers that connect processors and transfer data within data centers, while Lumentum manufactures lasers, chips, and equipment for optical connections used in data center servers. By merging these capabilities, the combined entity will expand its portfolio of solutions that use light to transmit data between chips and servers. Lumentum is a key player in photonics, a field that enables computers to transmit data between semiconductors faster than is possible with traditional copper connections.

The data center segment has become the primary driver of Marvell’s growth, having evolved from a business line that accounted for less than 10 percent of revenue in 2016. Matt Murphy, the chief executive officer of Marvell, stated that the company has staked everything on its data center direction. He described the shift toward optical connections in artificial intelligence infrastructure as a fundamental architectural change that represents a once-in-a-generation opportunity. Murphy added that the deal will help form a new stage in the development of communication technologies for artificial intelligence.

The Wall Street Journal also noted that Nvidia is a strategic investor in both companies. In early March, Nvidia announced a multi-year contract to purchase advanced laser components from Lumentum. Under that agreement, Nvidia committed to investing 2,000,000,000 USD in Lumentum to support research and development and to expand its manufacturing capabilities in the United States. Later that same month, Nvidia invested 2,000,000,000 USD in Marvell as part of a strategic partnership aimed at simplifying the integration of Nvidia systems with specialized artificial intelligence chip solutions.

If the deal is completed, Marvell’s technologies could be used in equipment that competes with Nvidia’s own products. Marvell is best known for its role in developing specialized artificial intelligence chips for Amazon Web Services. In August, Marvell announced an expansion of its commercial partnership with Google, under which the technology giant received the right to acquire shares of Marvell.

Reported by 3DNews.