Marvell Technology, Inc. (MRVL.US)'s US$115 billion "marriage of the century" has lost favor! The stock has fallen more than 40%, and experts estimate only a 50% probability of completion.

Note that Marvell Technology, Inc. (MRVL.US)'s plan to acquire Lumentum (LITE.US) for a massive US$115 billion to ramp up AI has received a lukewarm initial assessment from experts who bet on M&A deals. According to several merger arbitrage experts, the implied probability of the deal closing hovers at only about 50%, reflecting market doubts about whether the two companies can complete one of the largest technology deals in history. The selloff in both stocks has caused Lumentum's share price to trade at a significant discount to Marvell's all-stock offer, and that offer itself has also shrunk. Since media first reported the potential merger at the end of last month, Marvell has fallen nearly 40%, while Lumentum has dropped about 35%. Investors are questioning the economics of the deal, and these doubts intensified as a broader reassessment of AI trades triggered a stock market rout last week. As of Monday, a 14% spread existed between Lumentum's share price and Marvell's offer, a notable gap that reflects the scale and risk of the transaction. The gap persisted even as tech stocks rose that day. Investors were already wary of the long wait and potentially complex regulatory reviewthe deal is not expected to close until 2028. Recent market turmoil has amplified these concerns, exposing the risks of an all-stock transaction whose strategic logic rests heavily on the premise of continued spending growth in AI data centers and connectivity. Cabot Corporation Henderson, an event-driven strategy expert at Jones Trading, said, "A deal that drags on this long, paired with an AI cycle moving at such a fast pace, is really hard to calibrate; and when it's seen as a signal that the market has topped, it's never a good sign." US$115 Billion AI Deal Faces Market Skepticism Admittedly, it is not unusual for mega-deals to initially meet a negative market reaction before investors digest the terms and eventually accept their strategic logic. But Henderson noted that the magnitude of this stock move far exceeds ordinary nervousness. Shareholder votes at both companies will be the near-term hurdles for the transaction. Marvell's investors need to be convinced that the chipmaker is acquiring a key link in AI infrastructure rather than paying a cycle-top price for growth that may prove unsustainable. For Lumentum's shareholders, the all-stock structure adds another layer of uncertaintythe value of the acquisition premium they ultimately receive will depend on Marvell's share price at the time the deal closes. Meanwhile, integrating Marvell's signal-processing electronics and optical modules with Lumentum's lasers and other key optical components could trigger protracted antitrust review. Jennifer Rie, senior litigation analyst at industry research, said that although the two companies are likely to obtain regulatory approval, possibly with remedies attached, "China is the wild card." She noted that China's merger control authority is the primary antitrust and timetable risk for the deal. Chinese regulatory review has previously derailed multiple transactions. Qualcomm (QCOM.US) abandoned its US$44 billion acquisition of NXP Semiconductors NV (NXPI.US) in 2018; Intel Corporation (INTC.US) canceled its US$5.4 billion acquisition of Tower Semiconductor in 2023 after failing to obtain Beijing's approval. Broadcom Inc.'s (AVGO.US) US$69 billion acquisition of VMware also went through months of uncertainty before receiving conditional approval just days before a key deadline.