Santa Clara:US chipmaker Marvell Technology has announced an agreement to acquire Lumentum, a maker of optical components, in an all-stock deal valued at $115 billion on an enterprise basis. The acquisition is aimed at enhancing Marvell's presence in AI data centers, which require faster data connections across numerous processors.

According to Anadolu Agency – English, Marvell designs custom chips and networking equipment, while Lumentum specializes in lasers and optical transceivers that convert electrical signals into light and vice versa. Under the terms of the agreement, Lumentum shareholders will receive 4.5 Marvell shares for each share they hold. Based on the companies' closing prices on October 28, this offer values each Lumentum share at approximately $1,132, representing a 23.9% premium over its closing price before rumors of the deal surfaced.

Following the merger, Marvell shareholders will own about 67% of the new entity, with Lumentum shareholders holding about 33% on a fully diluted basis. Marvell's Chairman and CEO, Matt Murphy, is set to lead the combined organization. The companies anticipate that the deal will result in over $1 billion in annual cost savings and project that Marvell's adjusted earnings per share will increase in the first year after the transaction is finalized.

The boards of both companies have unanimously approved the merger, and they expect the transaction to close in the first half of 2028, pending shareholder and regulatory approvals.