Marvell Technology shares drop on Lumentum deal concerns

Marvell Technology Inc. shares fell 8.1% in morning trading on Friday to $200.70, continuing a sharp two-day decline after Bloomberg reported the company is in advanced talks to acquire Lumentum Holdings Inc., a maker of lasers and optical components.

The potential deal could be announced as soon as next week and carries a price tag of approximately $83 billion, which would make it one of the largest mergers in semiconductor industry history. The transaction is expected to be structured as an all-stock deal.

The proposed acquisition size relative to Marvell's own valuation has driven the stock decline. Raymond James analysts said the transaction could be earnings-per-share neutral by 2028 or result in dilution exceeding 10%, depending on the final deal structure.

The wide range of possible outcomes has led investors to sell the stock from its previous premium valuation. The deal would require regulatory approvals from both U.S. and Chinese authorities.

Rosenblatt reiterated a Buy rating on Marvell on Friday, while Piper Sandler and Stifel also maintained positive ratings on the stock.

Separately, Marvell executive Sandeep Bharathi sold 3,685 shares.

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