Marvell Technology is acquiring Lumentum, an optical components maker, in a fixed-ratio all-stock transaction valued at an implied enterprise value of $115 billion for Lumentum, the companies said Monday.
The deal creates a combined entity positioned to address surging AI infrastructure connectivity demands. Marvell Chief Executive Officer Matt Murphy told CNBC that the companies would create a new category by merging electrical and optical technologies.
"You need scale-up technology that needs semiconductors and optical working seamlessly together," Murphy said on "Squawk on the Street." "We are going to create a new category of company here."
Lumentum Chief Executive Officer Michael Hurlston told CNBC the deal addresses enormous opportunities in growing connectivity demands from the artificial intelligence infrastructure buildout.
Through the acquisition, Marvell said it can combine electrical and optical technologies to meet accelerating and shifting AI connectivity demands across regions and systems. Companies are increasingly relying on optical connections to piece together chips used to run and train large language models.
"We're actually going to create solutions around those that are highly sticky, and the reason that they're sold out is because the demand is exploding, and we don't see that changing anytime soon," Murphy said.
The transaction is structured as a fixed-ratio deal with no cash component, meaning the value will depend on the price of Marvell shares. Marvell shares slumped 8% in trading Monday, while Lumentum's stock sank 13%.
The announcement underscores the growing importance of optical connectivity in the artificial intelligence infrastructure buildout as companies seek to meet accelerating demand across regions and systems.
