Marvell shares rise 7.85% before Nov. 11 open as Lumentum deal remains in focus
Key Facts
Marvell Technology shares rose to $166.51 before the market opened on Nov. 11, up 7.85% from the previous close, according to Stock Analysis data at 6:42 a.m. Eastern time. The move came after the company's shares fell when it announced its agreement to acquire Lumentum on Nov. 2. The deal has an implied enterprise value of $115 billion, according to Marvell's statement. The premarket rise does not establish that the stock gained 25% during that day's session. At the Nov. 10 close, Marvell shares stood at $154.39, compared with $585.57 for Lumentum shares, according to EL7 data.
Under the deal announced on Nov. 2, Lumentum shareholders will receive 4.500 Marvell shares for each share they own in the company, according to the agreement terms published by Lumentum. The companies valued the consideration at about $1,132 per Lumentum share, a premium of about 23.9% to the unaffected closing price on Oct. 28. After the deal closes, current Marvell shareholders are expected to own about 67% of the combined company, versus about 33% for Lumentum shareholders, on a fully diluted basis. The market reaction therefore matters to shareholders in both companies, as the agreement combines a fixed stock exchange ratio with an expected change in ownership stakes. Those stakes remain contingent on the deal closing under its terms.
On the day the deal was announced, Marvell shares fell 12.7% and Lumentum shares fell 18.6%, according to an Associated Press report. Reuters reported that the two stocks fell more than 10% and more than 15%, respectively, that day. Reuters linked some investor concerns to the cost of building data centers, saying rising cash burn and debt at major technology companies had deepened concerns about spending. Axel Rudolph, an analyst at IG Group, described the deal as a "huge bet" and said investors were entitled to ask whether Marvell was paying too much and taking on too many commitments at once. Those moves relate to the Nov. 2 announcement session, while the rise before the Nov. 11 open reflects a move on a different date.
The companies have grounded their case for the merger in growing demand for bandwidth and the physical limitations of copper connections, saying they are accelerating the shift to optical technologies in AI infrastructure. They expect the merger to expand the combined company's total addressable market to $550 billion. They also said the deal offers a path to annual cost savings at a run rate exceeding $1 billion and will boost Marvell's earnings per share on its non-GAAP basis in the first year after closing. These are estimates announced by the companies that depend on the merger being completed, not realized results. The deal comes amid broader moves in technology stocks; on Nov. 11, the S&P 500 rose 1% and the Nasdaq 1.5%, according to the Associated Press, as AI stocks resumed their gains.
On the companies' business performance, Marvell said its preliminary revenue for the third quarter of fiscal 2027 was in line with its previous guidance, while narrowing its forecast range to ±2% from ±5%. Lumentum recorded revenue of $1.2626 billion in the first quarter of its fiscal 2027, up 136.5% year over year, compared with $533.8 million in the corresponding period. Lumentum forecast revenue of between $1.575 and $1.625 billion in the second quarter, and a non-GAAP operating margin of between 45% and 46%. Its chief executive said the company expects to add about $350 million to revenue sequentially in that quarter, and that operating margin would exceed 45%. He added that the company's second major win in NPO/CPO technologies is backed by purchase commitments exceeding $5 billion.
The deal still requires regulatory steps and shareholder approvals before it can close. Marvell said it must file a Form S-4 registration statement with the U.S. Securities and Exchange Commission, including a joint proxy statement and prospectus, then obtain a declaration of effectiveness before sending final documents to shareholders. Reuters expects the deal to close in the first half of 2028, subject to regulatory approvals, a shareholder vote and customary closing conditions. Until then, the exchange ratio, targeted ownership stakes, savings estimates and earnings accretion remain contingent on the agreement closing. The share move before the Nov. 11 open reflects a rise at that point in trading and on its own does not settle the stock's direction after the announcement.