Marvell buys Lumentum in stock deal, and shareholders criticize the offer

Marvell announced an agreement to buy Lumentum in an all-stock exchange transaction. According to Bloomberg, the operation has an enterprise value of US$115 billion. According to MarketWatch's report, shares of both companies fell on Monday, shortly after the announcement.

Lumentum (LITE) makes lasers and optical technologies used in high-speed data transmission. According to Bloomberg, the company supports the boom in artificial intelligence, which places the business among the most watched bets on the market.

The MarketWatch headline goes beyond the numbers and highlights the reaction of shareholders, citing the phrase of one of them who classified the proposal as “a useless offer”. The extract consulted does not identify who said this, so the criticism should be read as the opinion of an investor, and not as the companies' formal position.

The Investing.com article deals with the reasons behind the operation and the risks of dilution, although the available excerpt does not contain numbers. In a share exchange agreement, dilution is important because new shares enter the market and the stake of those who already own them may shrink, unless the combined business generates enough value to compensate.

In the view of a liberal newspaper, shareholder reaction acts as a healthy brake. Those who risk capital have the right to demand that each acquisition pays for itself, and a merger that appears expensive to the business owners deserves scrutiny before any celebration. The central issue is price and capital discipline, not being for or against the AI ​​sector.

The movement does not happen in isolation. According to Bloomberg, Apple rose after the balance sheet, with an increase of 25% since the low at the end of June and around US$ 1 trillion added to the market value, which shows that investors continue to pay attention to concrete results in the big technology names.

What changes for the investor

For those who invest, the case calls for attention to three points: the size of the dilution that will come with the new shares, the strength of criticism from shareholders and the details of the operation that do not yet appear in the available reports. The drop on the day of the announcement suggests caution, but does not indicate where the shares should go. This analysis is not a buy or sell recommendation or price prediction.

Automatically translated from Portuguese.