Lumentum has agreed to be acquired by Marvell in an all-stock transaction. Each Lumentum common share will be exchanged for 4.5 Marvell common shares, subject to the deal’s conditions and stockholder approvals. The companies also set out how Lumentum’s preferred shares, employee equity awards and board representation will be handled after the transaction.
The exchange ratio is fixed, but the value of the consideration will vary with Marvell’s share price. No dollar value for the deal is specified in the material provided.
Key details
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Common shareholders: Each Lumentum common share outstanding at closing will convert into the right to receive 4.5 Marvell common shares. Holders will receive cash instead of any fractional Marvell share.
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Lumentum preferred shareholders: Holders of Lumentum Series A preferred stock will generally receive Marvell common shares based on the number of Lumentum common shares each preferred share could convert into, multiplied by the 4.5 exchange ratio. Eligible holders may instead elect to receive one share of newly issued Marvell Series B preferred stock for each Lumentum preferred share. That new preferred stock is intended to carry the same terms and rights as Lumentum’s Series A preferred stock, with conversion into the common-share consideration described in the agreement.
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Employee equity awards: Lumentum stock options, restricted stock units and performance stock units will generally be converted into equivalent Marvell awards, with award share counts adjusted using the 4.5 exchange ratio. Option exercise prices will be adjusted accordingly. Performance stock units will become time-vesting restricted stock units, with the conversion calculation reflecting specified performance measures.
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Non-employee directors: Lumentum restricted stock units held by non-employee directors will be cancelled and converted into the right to receive the same common-share consideration as Lumentum common stockholders.
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Board representation: Immediately after the transaction closes, Marvell will appoint three people selected by Lumentum from among its directors, subject to Marvell’s reasonable approval. Marvell will nominate any of those appointees who remain on the board for election at its first annual meeting after closing.
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Approvals and next steps: Both companies will seek approval from their stockholders and work to obtain required regulatory approvals. They plan to prepare a joint proxy statement and registration statement for the shareholder vote. The transaction remains subject to those approvals and other closing conditions.
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Lumentum board position: Lumentum’s board unanimously approved the agreement and recommended that Lumentum shareholders adopt it.
Plain-English implications
Lumentum shareholders are set to become Marvell shareholders rather than receive cash for their common stock, so the value they receive will move with Marvell’s share price. After closing, Lumentum will no longer operate as an independent public company; Marvell will own the combined business, with three Lumentum-designated directors joining Marvell’s board.