This article first appeared on GuruFocus.
Marvell Technology Inc (NASDAQ:MRVL) shares edge higher 0.13% at 11:20 a.m. ET in early regular-session trading on November 12 while NVIDIA’s CEO resignation pulled AI chip names lower. Because Marvell is paying for Lumentum with its own shares, every move in its price changes the deal’s value.
The deal, announced November 2, swaps 4.5 Marvell shares for each Lumentum share and carries a headline value near $115 billion, according to 24/7 Wall St. Marvell would owe a $3.2 billion breakup fee if regulators block it, and closing is not expected before the first half of 2028. Marvell’s next earnings report is scheduled for December 1, after the close.
Using GuruFocus market values, Lumentum has about 90.7 million shares, so the deal would issue roughly 408 million new Marvell shares, about 47% of Marvell’s current count. That dilution explains why Marvell shares are sensitive to any doubt about AI optical demand. GuruFocus gives Marvell a GF Score of 84/100, with 7/10 financial strength and 6/10 momentum. At $162.87, the shares trade 27.2% above the GF Value of $128.08, a “Modestly Overvalued” label, at about 54 times earnings. The December 1 report must show AI networking growth strong enough to absorb that dilution.
