When Marvell Technology (NASDAQ:MRVL) agreed to acquire Lumentum (NASDAQ:LITE) on Nov. 2, the deal valued Lumentum at about $1,132 per share, a roughly 24% premium over its pre-talks trading price. Three days later, Lumentum closed at about $510. That's not quite the bargain it seems. Even based on the current value of Marvell's offer, Lumentum trades at about 85% of what it would be worth if the deal closes, a gap of about 15% (we'll discuss why we say "current value" in a bit). Here's why that gap exists, and why I don't think it's free money. Image source: Getty Images.
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