Lumentum Holdings Inc. (LITE; San Jose, CA), a major designer and manufacturer of innovative optical and photonic products, and Coherent, Inc. (COHR; Santa Clara, CA), one of the original laser companies and the introducer of the first commercial CO2 laser, have entered into a definitive agreement under which Lumentum will acquire Coherent in a cash and stock transaction valued at $5.7 billion.
The Boards of Directors of both companies have agreed that Coherent stockholders will receive $100 per share in cash and 1.1851 shares of Lumentum common stock for each Coherent share they own. At closing, Coherent stockholders are expected to own approximately 27% of the combined company.
Combined, a powerful competitor with Coherent’s photonics and lasers businesses, including in the microelectronics, precision manufacturing, instrumentation, and aerospace & defense markets, joined with Lumentum’s telecom, datacom, and 3D sensing photonics businesses, will create a diversified photonics technology company with significantly increased scale and market reach.
The combined company will be better positioned to serve the needs of a global customer base increasingly dependent on photonics to enable important end-market transitions, including the shift to digital and virtual approaches to work and life, the transition to 5G in wireless networking, advanced bioinstrumentation, advanced microelectronics, and new materials for next-generation consumer electronic devices, flat panel and OLED displays, communications equipment, electric and autonomous vehicles, and energy storage.
Alan Lowe, Lumentum President and CEO, said, “We are thrilled to join forces with Coherent to create one of the world’s largest and most diverse photonics technology companies with leading positions in the growing market for photonics. Coherent brings one of the most recognizable and respected brands in the photonics industry and a very talented and innovative team. Together, we expect to increase the pace of innovation, and to be at the forefront of the long-term market trends that are dependent on the capabilities of photonics. As I often say, the future is truly bright at Lumentum—and with the addition of Coherent, it is even brighter.”
Andy Mattes, Coherent President and CEO, stated, “We are excited to bring Coherent's strength in OLED display manufacturing, semiconductor wafer inspection, and life science instrumentation to Lumentum’s portfolio, to name a few of the key applications we serve, and believe Lumentum’s expertise and scale in world-class photonics components and systems will accelerate Coherent’s vertical integration and addressable market expansion in several high-growth areas, such as directed energy in defense and precision battery welding in automotive. We look forward to contributing to a customer-centric, innovative culture.”
Lumentum intends to finance the cash consideration of the transaction through a combination of cash on hand from the combined company’s balance sheet and $2.1 billion in new debt financing from a fully committed Term Loan B.
Two members of the Coherent Board will be appointed to the Lumentum Board, which will be expanded to nine directors, at the closing of the transaction, expected in the second half of calendar year 2021, subject to approval by Lumentum’s and Coherent’s stockholders, receipt of regulatory approvals, and other customary closing conditions.
Industrial Laser Solutions’ initial thoughts are that Coherent is a major contributor to global industrial laser product revenues and a charter member of the unofficial ILS Billion-Dollar Club, of which Lumentum was under consideration for membership. The Club’s six members generate more than $10 billion of industrial lasers, laser systems, and related products in global market, so their revenue results are key to our annual economic review. This consolidation will not increase the number or members (six), but certainly member rankings (perhaps number 2).
Source: Adapted from Lumentum press release
