Marvell Technology Inc. (MRVL) stock edged higher in premarket trading Tuesday as investors chewed over fresh concerns about its proposed $115 billion acquisition of Lumentum Holdings Inc. (LITE).

Here's the thing: the people who get paid to price merger risk think this deal is basically a coin flip. Merger arbitrage specialists estimate roughly a 50% chance of closing, Bloomberg reported Tuesday.

A $115 Billion AI Deal With Growing Skepticism

The market has already voted, and it isn't feeling great. Marvell shares have fallen nearly 40% since reports of the potential acquisition emerged in late October. Lumentum has lost about 35% over the same stretch.

As of Monday, Lumentum shares traded at a 14% discount to the value of Marvell's all-stock offer. That widening gap is the market's way of saying it has doubts about the valuation, the regulatory hurdles and the lengthy closing timeline.

The transaction, expected to close in 2028, would combine Marvell's signal-processing technology and optical modules with Lumentum's lasers and other optical components. On paper, that's a tidy AI infrastructure package. In practice, investors remain worried about whether artificial intelligence infrastructure spending can keep up its current pace.

Jennifer Rie, senior litigation analyst at Bloomberg Intelligence, identified China's regulatory review as a major risk to the deal's timing. That's the kind of thing that can turn a 2028 close into a 2029 close, and merger spreads hate uncertainty.

Still, Rosenblatt analysts highlighted Marvell's previous acquisitions of Cavium and Inphi, which secured Chinese regulatory approvals within eight and five months, respectively. So Beijing hasn't exactly been a brick wall for this company before.

Marvell Stock Is Under Technical Pressure

Marvell shares remain below key moving averages despite Tuesday's modest premarket gain. The stock trades 27.2% below its 20-day simple moving average of $211.68 and 33.9% below its 50-day SMA of $233.06.

It also sits 16.9% below its 200-day SMA of $185.42, signaling continued selling pressure. The moving average convergence divergence (MACD) indicator remains below its signal line, suggesting weak bullish momentum. Traders are watching resistance near $171 and support around $147.

Meanwhile, Marvell's next earnings report is scheduled for Dec. 1. Analysts expect earnings of $1.09 per share on revenue of $3.14 billion.

MRVL Price Action

Marvell shares rose 0.38% to $155.18 in Tuesday's premarket trading, according to market data.