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Street View: Analysts back logic of Marvell's $115 billion Lumentum deal, flag premium

By Reuters News

** Marvell Technology MRVL.O is buying optical components maker Lumentum LITE.O in a $115 billion all-stock deal, including debt

** The deal ranks among the biggest tech deals of the year and highlights the growing demand for the optical hardware that powers AI data centers


TYING THE OPTICAL KNOT

** Melius Research says the best argument for the deal is that optics are moving inside the rack, with this deal creating a powerhouse that will drive higher content and make it a more strategic partner for Nvidia CEO Jensen Huang and hyperscalers

** Oppenheimer says the deal creates the leading AI connectivity pure play, combining MRVL's digital signal processors (DSPs), transimpedance amplifiers (TIAs), silicon photonics (SiPho) and switches with LITE's high-speed lasers, modulators and photodiodes

** Jefferies says the deal is mainly aimed at strengthening MRVL and LITE's position in scale-up and scale-in networking for graphics processing units (GPUs) and other accelerated processors (XPUs), while creating cross-selling and co-design opportunities

** Morningstar says the deal makes strategic sense, particularly the integration of optical chips and lasers for future co-packaged optics roadmaps, but believes Marvell is paying an excessive premium

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