Coherent to buy Excel for $376 million
As part of its ongoing strategy to expand into markets with strong growth potential, Coherent has entered into a definitive agreement to acquire Excel Technology (East Setauket, NY) in an all-cash transaction valued at $376 million ($30/share of Excel common stock).
SANTA CLARA, CA - As part of its ongoing strategy to expand into markets with strong growth potential, Coherent has entered into a definitive agreement to acquire Excel Technology (East Setauket, NY) in an all-cash transaction valued at $376 million ($30/share of Excel common stock). Coherent intends to pay the aggregate purchase price through a combination of available cash and external financing. The deal is expected to close by mid-summer.
“Over the last several months, we have been highlighting the long-term growth potential of the materials processing market as well as the need for consolidation in the photonics industry,” said John Ambroseo, president and CEO of Coherent. “We believe the materials processing market is poised for solid growth over the next decade as photonic-based tools continue to displace mechanical tools. This is true in several application areas, including textiles processing, security and lock coding, as well as precision and heavy machining, also respectively referred to as micro machining and macro machining. The market penetration results from the higher flexibility, the capacity to drive feature size reductions, and ability to improve yields of laser-based tools compared to mechanically based legacy systems.”
According to John Harmon of Needham & Co. (New York, NY), while the pending acquisition makes strategic sense and accelerates what many see as the necessary consolidation of the laser industry, it also poses some challenges-most notably in the integration of the two companies. While Harmon does not expect Coherent to divest any of Excel’s systems businesses-reversing its policy of steering clear of the laser system business-he points out that there is significant overlap among Coherent’s and Excel’s products, particularly in CO2 lasers (notwithstanding that Coherent’s optically pumped semiconductor lasers overshadow many of Excel’s technologies). As a result, he expects that there will be a detailed review of the companies’ overlapping products with an eye toward determining the “best of breed.”
- Kathy Kincade