Before Marvell Technology (NASDAQ: MRVL) announced its acquisition of optical component maker Lumentum (NASDAQ: LITE), the leaders of both companies consulted NVIDIA (NASDAQ: NVDA) CEO Jensen Huang about the deal.
According to a Bloomberg report dated November 3, Marvell CEO Matthew Murphy and Lumentum CEO Michael Hurlston spoke with Huang by phone before the transaction was made public, seeking his perspective. People familiar with the matter said Huang expressed support for the deal.
NVIDIA Has Invested $2 Billion in Each Company
The report noted that NVIDIA had already invested $2 billion in each of Marvell and Lumentum earlier this year.
This background has made NVIDIA's stance on the transaction a focus of market attention. As a major supplier of AI training and inference chips, NVIDIA is driving the construction of ever-larger AI data centers; and as computing cluster sizes expand, the high-speed optical connections needed to transmit data between chips and servers are becoming a critical link in the supply chain.
Marvell's core business covers custom chips, networking, and data infrastructure semiconductors, while Lumentum provides optical components such as lasers. According to the report, the combined entity would pair Marvell's custom chips with Lumentum's optical devices used for data transmission between chips and servers, forming a more vertically integrated high-speed interconnect supplier.
Hurlston said in a Fox Business interview on Monday that NVIDIA's reaction was "very positive."
He stated: "We believe that through this merger, we can actually deliver more products to NVIDIA faster."
Murphy said on an investor call that he and Hurlston have "very similar views" on where the industry is heading. He said: "We've known each other for a long time, both professionally and personally. Lumentum is an important customer of Marvell, and we've always had a lot of interaction with their team. It just came together naturally."
Talks Began in Summer, Announcement Moved Up Due to Leak
According to the report, citing people familiar with the matter, Marvell and Lumentum began discussing a potential merger this summer, with negotiations kept strictly between the two companies.
The two companies had originally planned to announce the deal alongside Lumentum's quarterly earnings release on Thursday, but decided to disclose it early after the transaction plans were leaked to the media.
Regarding the size of the deal, Marvell agreed to acquire Lumentum in an all-stock transaction valued at approximately $115 billion including debt, which it described as the second-largest deal in the technology industry. The transaction is expected to close in the first half of 2028.
As previously reported, the share exchange arrangement for the transaction is that for each Lumentum share held, Lumentum shareholders will receive 4.5 shares of Marvell common stock.
Market Votes with Its Feet, Premium Nearly Evaporates
However, the capital market's reaction to the deal was entirely different.
After the transaction announcement, Lumentum's stock price fell 18.6% in a single day to close at $684.40, making it the worst performer in the S&P 500 Index that day; Marvell dropped 12.7%, marking its worst three-day losing streak since October 2000. Since news of the negotiations leaked last week, Marvell's stock has fallen more than 30% cumulatively.
This directly eroded the actual value of the transaction. Under the initially set exchange ratio, Lumentum shareholders would receive 4.5 shares of Marvell common stock for each share held, corresponding to a premium of approximately 23.9%. But as Marvell's stock continued to decline, the actual consideration Lumentum receives has fallen below $800 per share, more than 10% below the price before the negotiation news leaked, and the original premium has nearly evaporated.
Investor dissatisfaction centers on three points: the premium is too low, there is no cash consideration, and the lock-up period is too long.
Day trader Marek Mscichowski, who holds a small position in Lumentum, directly called the deal a "garbage offer," and said: "The deal isn't expected to close until the first half of 2028, which in the AI investment world is essentially 50 years. Marvell's stock could have already collapsed by then."
Marvell shareholder Victor Silva wrote on X: "Pushing the closing date to the first half of 2028 means the stock price could remain under pressure throughout that period." Needham analyst Ryan Koontz said bluntly that Lumentum's board "still has a lot of persuading to do" to win shareholder votes.
Analysts are also divided on the synergy logic. Morgan Stanley believes the convergence trend between optics and chips provides some justification for the deal 鈥?Marvell would be able to integrate optical technology at the earliest stages of chip design, potentially bringing improvements in cost and energy efficiency. The two sides also disclosed a cost synergy target of more than $1 billion annually, but there is no clear timetable for when it will be achieved.
Needham analyst Koontz is more reserved. He asked: "How do you put together two companies with highly different businesses and then save $1 billion on product costs with almost no overlap?" He noted that Marvell focuses on network switching chips while Lumentum focuses on fiber optic components, with very limited operational overlap between the two, calling it a "long-shot bet."
Among all risk factors, regulatory approval was listed by multiple analysts as the "biggest variable." C.J. Muse wrote in a research note: "We believe regulatory approval will be the biggest question mark for this transaction."
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