Marvell Technology shares fell more than 3% on Monday after the chipmaker announced a $115 billion deal to acquire optical components maker Lumentum. Lumentum shares also fell after the announcement.
The acquisition will give Marvell greater access to optical technology and manufacturing capacity. Lumentum makes lasers and other optical components used in these connections. Marvell has already attracted attention from Nvidia CEO Jensen Huang.
The $115 billion deal could become the largest merger between two publicly traded companies on record. The deal is expected to increase the combined company’s total addressable market to $550 billion. Under the agreement, Lumentum shareholders will receive 4.5 Marvell shares for every Lumentum share they own. The deal values Lumentum at approximately $115 billion, or $1,132 per share, according to the announcement. Marvell’s market value stood at around $176 billion on Monday morning. Lumentum’s market value was close to $76 billion at the same time. Despite falling more than 3% on Monday, Marvell shares have gained over 130% so far this year. Lumentum shares have also performed strongly, rising 128% year to date, according to Yahoo Finance.
The agreement is expected to give Marvell a stronger position in the fast-growing artificial intelligence (AI) infrastructure market , according to the companies’ announcement. This means the two companies will have access to a much larger market for their products and services, according to Yahoo Finance. These have become important requirements for building AI infrastructure as companies expand their AI computing systems, according to Yahoo Finance. Its products help AI systems communicate faster and support the growing demand for advanced computing infrastructure, according to Yahoo Finance. Earlier this year, Marvell shares rose sharply after Huang described the chipmaker as “the next trillion-dollar company”, according to Yahoo Finance.
