Engineered materials and optoelectronic components manufacturer II-VI Incorporated (Pittsburgh, PA) has made an offer to acquire laser maker Coherent (Santa Clara, CA) in a cash and stock transaction. Under the terms of II-VI’s proposal made in a letter on February 12, 2021 to Coherent’s Board of Directors, Coherent’s shareholders would receive $130.00 in cash and 1.3055 II-VI common shares for each Coherent share. Based on February 11th’s closing price of II-VI shares, II-VI’s proposal is valued at $260.00 per Coherent share.
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 February 11th closing share price, and a 9.8% premium to the implied value of MKS Instruments’ acquisition proposal based on MKS’ closing share price. Moreover, since II-VI has substantially less product overlap with Coherent than either Lumentum or MKS, II-VI believes there is greater certainty of closing and with less potential impact to the combined value. 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.
Vincent D. Mattera, Jr., CEO of II-VI, says that the combination of II-VI and Coherent would enable an “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, Mattera says, the company expects to collaborate even more broadly across its customer base.
II-VI intends to fund the transaction with cash on hand and debt financing led by J.P. Morgan Securities LLC. In addition, Bain Capital has expressed strong interest in a potential equity investment in the combined company. The execution of a definitive merger agreement between Coherent and II-VI would be subject to approval by each company’s Board of Directors and completion of the transaction would be subject to customary closing conditions, including receipt of required regulatory approvals and approval of II-VI and Coherent shareholders.
Source: II-VI Incorporated press release via Globe Newswire – February 12, 2021
LFW Staff
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