Deals

Marvell Would Owe Lumentum $5.8 Billion If It Walks Away Or Backs A Rival Bid

The merger agreement adds a $3.2 billion regulatory fee, a reciprocal $2.9 billion Lumentum fee and three Marvell board seats for Lumentum directors.

Matteo Parrino Jonathan Ponciano

Matteo Parrino, Jonathan Ponciano

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Marvell Would Owe Lumentum $5.8 Billion If It Walks Away Or Backs A Rival Bid

Marvell would owe Lumentum a $5.8 billion termination fee if its board pulls its support for the merger or it takes a superior proposal, according to the merger agreement Lumentum disclosed in an 8-K filed Monday. Lumentum, which makes lasers and optical modules that move data for cloud and AI customers, owes a reciprocal $2.9 billion in matching circumstances.

Three fees, one outside date

Marvell must also pay the $5.8 billion fee if the deal is terminated after an alternative-transaction proposal and, within twelve months, Marvell signs or completes a deal for a majority of itself.

A separate $3.2 billion regulatory fee is payable by Marvell if the merger fails on antitrust or foreign-investment grounds, or because a required approval is denied or not obtained by the outside date. It applies only if every other closing condition has been met or can be.

The outside date is November 1, 2027. It can be extended in steps to February 1, 2028, May 1, 2028 and August 1, 2028 if regulatory approvals are still outstanding.

4.500 Marvell shares for each Lumentum share

Each Lumentum common share converts into 4.500 Marvell shares, with cash for fractions. Lumentum had 90,684,914 common shares and 2,876,415 Series A preferred shares outstanding as of October 29, 2026, the agreement says. Series A holders get Marvell common stock on an as-converted basis, or can elect a new Marvell Series B preferred with the same terms.

Lumentum stock options, restricted stock units and performance units convert into Marvell awards. Performance units become purely time-vesting units.

Lumentum will name three of its current directors, reasonably acceptable to Marvell, to Marvell's board. Marvell must nominate those still serving for election at its first annual meeting after closing.

A tax backstop for the CEO

Lumentum CEO Michael Hurlston signed a tax reimbursement agreement. If excise tax under Section 4999 of the tax code still applies after steps to reduce the Section 280G effects, the company would pay him enough to leave him in the same after-tax position. The agreement is void if the merger agreement is terminated. The board also approved similar agreements for other named executive officers as needed.

Marvell and Lumentum are to file a joint Form S-4 registration statement that will include the proxy materials for both companies' stockholder meetings. The companies planned a joint investor call at 8:00 a.m. Eastern on Monday.

Both boards have unanimously approved the deal, and Lumentum's would be a wholly owned subsidiary of Marvell once the mergers close.

Sources

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