Marvell will combine with Lumentum, the optical components maker, in an all-stock deal valued at $115bn that gives Lumentum holders 4.500 Marvell shares for each of theirs. ChainCatcher, citing Marvell's announcement, says that implies about $1132 a share, a premium of about 23.9% to the October 28 close, which it says was unaffected by rumours. Because the exchange ratio is fixed, what Lumentum holders receive moves with Marvell's share price.

Marvell holders would own 67% of the combined company, and ChainCatcher says more than $1bn of annual cost savings are expected from the deal.

Lumentum's first-quarter earnings of $4.57 a share beat expectations by $0.30, though revenue of $1.26bn was a shade under the $1.27bn expected. For the second quarter it expects revenue of $1.575bn-$1.625bn. Chief executive Michael Hurlston said growth was led by pump lasers and optical circuit switches, with a second major NPO/CPO win backed by purchase commitments above $5bn.

Marvell's own targets need that kind of demand. Chief executive Matt Murphy sees revenue of $70bn to $90bn in fiscal 2031, four to five times the about $9.5bn of the last four quarters, and says data centre revenue could top $30bn by 2028. Lumentum's lasers and switches give those targets a manufacturing base, rather than leaving them to rest on orders from the largest cloud companies alone.

The deal also bears on October 15, when Marvell fell 5.5% alongside other chip stocks in a sector-wide selloff. It does not ease that pressure itself. Whether Lumentum's orders turn into Marvell data centre revenue depends on integration that has not been tried, and the deal is not due to close until the first half of 2028, pending shareholder and regulatory approval.

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