II-VI made an offer to acquire Coherent, a global laser technology leader, in a cash and stock transaction priced at $260.00 per Coherent share (Coherent’s shareholders would receive $130.00 in cash and 1.3055 II-VI common shares for each Coherent share), based on the company closing stock price on February 11th.
II-VI’s proposal represents a premium of 24.0% to the implied value of Coherent’s merger agreement with Lumentum, based on Lumentum’s closing share price on February 11th, and a 9.8% premium to the implied value of MKS Instruments’ acquisition proposal based on MKS’ closing share price on February 11th.
II-VI argues that its bid had a has greater certainty of closing because of substantially less product overlap with Coherent. II-VI also expects to achieve estimated, combined run-rate synergies of $200 million annually within 36 months. II-VI anticipates the transaction to be accretive to non-GAAP EPS in the second year following closing.
“The combination of II-VI and Coherent would create a uniquely strategic global leader capable of delivering to our customers the most attractive combination of photonic solutions, compound semiconductors, as well as laser technology and systems. We believe now is the right time to embark on this combination given significant megatrends, with burgeoning applications in both industrial and semiconductor capital equipment segments, including those that enable consumer electronics and displays. Moreover, II-VI expects to accelerate our growth in aerospace & defense, life sciences, and laser additive manufacturing by utilizing our compelling integrated solutions in lasers, optics, and electronics. With expanded capabilities, we expect to collaborate even more broadly across our customer base as their design-in leader of choice. In addition, with our culture of innovation and strong track record of merger integration, we expect to deliver significant value to all stakeholders, including both companies’ shareholders, customers, employees, and business partners,” said Dr. Vincent D. Mattera, Jr., Chief Executive Officer of II-VI.
Lumentum to acquire Coherent for its photonics and laser expertise
Lumentum agreed to acquire Coherent in a cash and stock transaction valued at $5.7 billion, with Coherent stockholders receiving $100.00 per share in cash and 1.1851 shares of Lumentum common stock for each Coherent share they own. The combination will create a leading photonics company with significant positions in the growing market for photonics, an expansive global customer base and a well-diversified revenue mix. The transaction value represents a premium of 49% to Coherent’s closing price on January 15, 2021.
Coherent, which was founded in 1966 and is based in Santa Clara, California, is a leading supplier of photonics and lasers used in the microelectronics, precision manufacturing, instrumentation, and aerospace & defense markets. For its most recent fiscal quarter ended January 2, 2021, Coherent has announced preliminary revenue in the range of $325 – $327 million.
Lumentum, which is based in San Jose, California, is a leading supplier of photonic solutions for the Telecom, Datacom, and 3D Sensing markets.
Lumentum said the acquisition of Coherent accelerates its penetration of the more than $10 billion market for lasers and photonics outside of the communications and 3D sensing applications. Lumentum also expects photonics “to play an increasing role in the accelerating shift to increasingly digital and virtual approaches to work and daily life, addressing climate change, new approaches to health care and monitoring, and addressing new safety and security.” The combined company is expected to generate more than $150 million in annual run-rate synergies within 24 months of the closing of the transaction.
