Coherent Inc. agrees to II-VI’s buyout offer worth £5.10 billion

By: Wajeeh Khan
Wajeeh Khan
Wajeeh is an active follower of world affairs, technology, an avid reader, and loves to play table tennis in… read more.
on Mar 25, 2021
  • Coherent Inc. agrees to II-VI’s buyout offer worth £5.10 billion.
  • The new agreement offers Coherent stockholders £160 in cash.
  • Coherent expects the deal to close in the fourth quarter of 2021.

Coherent Inc. (NASDAQ: COHR) agreed to a buyout offer worth £5.10 billion from II-VI Inc (NASDAQ: IIVI) on Thursday. The announcement scratched the merger deal with Lumentum Holdings Inc. that Coherent had signed weeks ago.

Coherent shares slid a little under 1% in premarket trading on Thursday and lost another 1% on market open. The stock is now exchanging hands at £184.53 per share after recovering from a low of £65.40 per share in March 2020, when the COVID-19 crisis was at its peak. If you want to invest in the stock market online, you will need a reliable stockbroker – here is a list of the top few to make selection easier for you.

The deal offers Coherent stockholders £160 in cash

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The new agreement offers Coherent stockholders 0.91 shares of II-VI on top of £160.26 in cash. In comparison, the former deal with Apple supplier had offered Coherent stockholders 0.6724 shares of Lumentum and £167.55 in cash.  

In a statement on Thursday, Lumentum, whose shares jumped 5.7% on the news, said:

“Coherent’s board of directors chose to accept an offer that is inferior in overall value and cash consideration.”

Coherent is now liable to pay £158.52 million to the telecommunications equipment company for terminating the agreement. The laser maker had initially signed a merger deal with Lumentum worth £4.15 billion in January. In subsequent weeks, MKS Instruments and II-VI Inc had also joined the bidding.

Coherent expects the deal to close in Q4 of 2021

According to Coherent, its deal with II-VI is likely to close in Q4 of 2021. The two companies are yet to receive approval for the deal from their shareholders. The agreement is subject to regulatory approval as well.

Coherent named Credit Suisse and the Bank of America as financial advisors for the new deal. Slate, Arps, Skadden, and Meagher & Flom LLP will serve as legal advisors.

II-VI shares were reported about 7% down in premarket trading on Thursday, but the stock recovered roughly half of the intraday loss on market open. Including the price action, II-VI is now trading at £47.50 per share. In comparison, it had started the year 2021 at a per-share price of a higher £55.37.

II-VI performed largely upbeat in the stock market last year with an annual gain of more than 100%. At the time of writing, the semiconductor manufacturing company is valued at £5.0 billion and has a price to earnings ratio of 38.24.

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