$MRVL · Jose Najarro Stocks · 2026-11-03

If you are an investor in Marvell or Lumintum today, you are probably wondering : What is happening in the world of chips? Marvell recently announced its acquisition of Lumintum by paying a premium, yet the stock of both companies has declined.

Today we received final confirmation that Marvel is acquiring Lumintum. It's still subject to approvals, isn't it? So, this is not guaranteed. I think there will be some opposition here given that the optics market is a supply-limited field.

I wonder if the regulators will put obstacles in the way of this deal.

Based on data from October 28, the deal was valued at approximately $115 billion . When the transaction is entirely in stocks , a fixed exchange ratio creates a variable dollar value.

If Marvel's stock rises significantly, the amount you will pay for Lumentum will also rise significantly . This is why it is important to realize that just because the deal was worth $115 billion on October 28, it is not worth the same amount now.

But if we look at today’s market movements on November 2, we find that the price of “Marvel” is at $171. The price of "Lite" is $684. If you multiply 4.5 by the price of "Marvel", you get $771.

This represents only a premium of approximately 12.7%. Isn't that so? Therefore, volatility and price premium will change significantly over time.

Now, what will this merged company look like? The strategic argument revolves around designing the electrical and optical components of the artificial intelligence network together.

We already saw that at Marvell's recent investor day. They mentioned that one of the biggest opportunities they see before them is in the optics market. Now, Marvell offers custom chips, network adapters, and digital optical signal processors (DSPs).

Now, I would say that the first counter-argument to that is that you are making a full-fledged stock deal . So, theoretically, if the market were to end soon, Marvell shares would also become much less valuable.

So, it's not like you're benefiting much from this, is it? The bonus wasn't that huge. So , that doesn't seem to be the reason.

Now, Matt Murphy has opposed this idea ; For those who are unaware, Matt Murphy is the CEO of Marvel. The question was: Are you doing this only because of a tight supply market?

He framed his answer around a long-term architectural change. The demand for vertical visual expansion was already beginning to emerge, with internal expansion representing another opportunity thereafter.

As for Marvell, with the release of this announcement, it also had to share any updates to its preliminary third-quarter results. There are no changes, is there? I think the only thing is that Marvel's scope has become more accurate.

Previously it was $3.15 billion, plus or minus 5%. Now it is $3.15 billion, plus or minus 2%. It's clear we're already at the end of the quarter, so they know a lot of the numbers more accurately.

They say, "Look, we've become more precise in our range, which means the upside potential isn't great for the next quarter."

Therefore, Marvell announced a second major deal in the field of near-beam optics (NPO) and co-beam optics (CPO), with customer purchase commitments exceeding $5 billion. Marvell also said that the vision for optical circuit switches (OCS) has expanded, describing a future annual revenue opportunity in the billions of dollars.

OCS’s long-term prospects remain just that—prospects—but overall , there is no end in sight for the optics market.

Now, the joint call also touched on some kind of financial profile for this acquisition or merger. So together they combined the actual first-quarter results and the third-quarter guidance to represent that they would have combined revenues of approximately $17.7 billion and adjusted operating margins of approximately 39%.

Most importantly, they believe this company can currently deliver nearly $1 billion annually in targeted synergies immediately. The main reason is primarily due to the cost of the goods sold, as they will not pay the middleman's tax when purchasing some of these visual solutions.

A lot of things happened in the market today, didn't they? We cannot attribute everything to this acquisition. We continue to receive reports of wider sales in the field of artificial intelligence.

We have many concerns about the spending of liquidity and debt in the artificial intelligence market. We continue to see bond yields in the market continuing to show the downside.

And there are elections taking place, aren't there? So, there are many different reasons that may cause some sales to occur. However, regardless of that , now that Marvel and Lumintum stocks are linked, a drop in Marvel's stock price creates negative pressure on Lumintum .

Therefore, a fixed exchange ratio creates a clear mechanical link between the stock price and the current value.

During the call, one of the analysts asked whether Marvell was buying near the peak of its short- term valuation, and I think that's another concern, isn't it? Are both companies overpaying and are their market values too high?

I don't think that's the case now. In my opinion, both companies are at attractive levels, but it's one of the concerns affecting the market.

So, what can we expect to see? For Marvel shareholders, the small question is what each share will achieve after the new shares are entered into the denominator, right? The company stated that you will see an increase in earnings per share with the addition of "Lumentum".

I'm very optimistic about the integrated solution they offer, aren't I? Marvell's integrated solution. I think this could be a huge win for Marvel if it happens, because they could gain more and more customers because of it.