II-VI, Inc. (IIVI) Revises Proposal to Acquire Coherent (COHR)

March 8, 2021 7:15 AM EST

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II-VI Incorporated (Nasdaq: IIVI), a global leader in engineered materials and optoelectronic components, delivered to Coherent Inc.’s (Nasdaq: COHR) Board of Directors on March 5, 2021 a revised proposal to acquire all outstanding shares of Coherent in a cash and stock transaction. Under the terms of the revised proposal, Coherent’s shareholders would receive $170.00 in cash and 1.0981 II-VI common shares for each Coherent share, which implies a total enterprise value of $6.5 billion and total per share consideration of $260.00 based on the 10-day volume weighted average price (VWAP) of II-VI shares as of March 5, 2021. Coherent’s Board of Directors has informed II-VI that it deems II-VI’s revised proposal superior to Coherent’s merger agreement with Lumentum Holdings Inc.

II-VI’s revised proposal includes multiple enhancements from its February 12, 2021 offer, including 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. The Bain Capital investment will allow the company to significantly reduce leverage. Pro forma for the transaction, II-VI anticipates total debt of approximately $4.2 billion and net debt of approximately $3.7 billion at closing. In connection with the investment, Steve Pagliuca, Co-Chairman of Bain Capital, is expected to join the II-VI board upon closing.

Following extensive due diligence, II-VI now expects the combined companies to achieve run-rate cost synergies of $250 million annually within 36 months, with approximately 60% from cost of goods sold and 40% from operating expenditures. II-VI continues to expect the transaction will be accretive to non-GAAP EPS in the second year following closing.

“We are pleased that Coherent’s Board has deemed our offer a Company Superior Proposal and we stand ready to execute a merger agreement in the coming days,” said Dr. Vincent D. Mattera, Jr., Chief Executive Officer of II-VI. “Together, II-VI and Coherent will leverage our combined technology platforms for a broad range of laser-enabled end markets, while fulfilling our vision of a world transformed through innovations vital to a better life today and sustainability of future generations. In particular, the combination will allow us to accelerate our growth by offering compelling integrated laser solutions for electric vehicle production lines, laser additive manufacturing, aerospace & defense, and life sciences.”

Steve Pagliuca stated, “Our team at Bain Capital has been working alongside the II-VI team to understand the compelling benefits of this transformative business combination. We are extremely excited about the prospects for the combined II-VI and Coherent company, and I look forward to joining the II-VI board of directors.”

Allen & Company LLC and J.P. Morgan Securities LLC are acting as II-VI’s financial advisors, and Wachtell, Lipton, Rosen & Katz and K&L Gates are serving as legal advisors.



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