Coherent Says Revised II-VI Proposal Superior to Lumentum Agreement

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SANTA CLARA, Calif., March 8, 2021 — Coherent determined that a revised acquisition proposal from optical components and semiconductor materials manufacturer II-VI is superior to the terms of a January merger agreement between Coherent and laser and optical fiber developer Lumentum.

Coherent notified Lumentum it intends to terminate that agreement if it does not receive a revised proposal from Lumentum by Thursday, March 11.

The revised proposal from II-VI builds on a previous unsolicited acquisition proposal that II-VI submitted to Coherent on Feb. 12 following an unsolicited bid from MKS Instruments. Per terms of the new proposal, each share of Coherent common stock would be exchanged for $170 in cash and 1.0981 shares of II-VI common stock following completion of the transaction. Those terms, II-VI said in a press release, imply a total per share consideration of $260 and enterprise value of $6.5 billion.

Under terms of the initial II-VI bid, Coherent shareholders would have received $130 in cash and 1.3055 II-VI common shares for each Coherent share. Based on the closing price of II-VI shares on Feb. 11, the proposal was valued at $260 per Coherent share.

Coherent said it also received revised proposals from Lumentum (multiple) and MKS Instruments. Under terms of one of the new Lumentum proposals, Coherent reported, each share of Coherent common stock would be exchanged for $175 in cash and 1.0109 shares of Lumentum common stock at the completion of the transaction.

Coherent said that the Lumentum proposal also included a “significantly higher” termination fee as a condition of its acceptance of a competing proposal. Coherent currently faces a breakup fee of more than $200 million in walking away from the initial Lumentum deal. Another Lumentum proposal involved a Coherent common stock exchange of $170 in cash with a higher termination fee, Coherent said.

Under terms of MKS’ revised offer, Coherent said, each share of Coherent common stock would be exchanged for $135 in cash and 0.7516 of a share of MKS common stock.

The II-VI proposal that Coherent’s board of directors ultimately deemed superior additionally includes fully committed debt financing from J.P. Morgan Securities LLC and a $1.5 billion equity investment by an affiliate of Bain Capital in the combined company. II-VI said it anticipates total debt of $4.2 billion and net debt of around $3.7 billion at closing. The revision also says that Bain Capital Co-Chairman Steve Pagliuca is expected to join the II-VI board after closing.

Lumemtum, in a press release, said it will review the II-VI bid.

Published: March 2021
CoherentII-VIBusinessmergers & acquisitionsLasersMKSMKS InstrumentsLumentumLumentum Holdings

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