Coherent bidding war continues as II-VI ups the stakes

Created March 19, 2021
News and Business

The battle for ownership of Coherent Inc. took another turn when II-IV raised its bid for the photonics manufacturer in a cash and share offer which Coherent’s board deemed ‘superior’ to Lumentum’s latest bid.

Backed up by financial partners, both II-VI and Lumentum have been out-bidding each other for a number of weeks recently. Lumentum topped II-VI’s previous bid with an offer of US$220 per share in cash and 0.6100 shares of Lumentum common stock for a total of US$6.9 billion. The following day II-VI outbid Lumentum with an offer of US$220 in cash and a share swap of 0.91 of II-VI’s common stock for each Coherent share, capping Lumentum’s share offer by around US$10 per share.

II-VI’s revised proposal includes US$5.4 billion of fully committed debt financing from J.P. Morgan Securities LLC and a US$1.5 billion equity investment from Bain Capital. As a sweetener, Bain says it is interested in making a further investment of up to US$650 million on the same terms. The conversion price of Bain’s entire equity investment is $85.00 per share. Financial backing for Lumentum comes in the shape of Silver Lake which had agreed to a US$1 billion equity investment in a Lumentum/Coherent combination. II-VI.

II-VI CEO Chuck Mattera pointed to the firm’s recent acquisition of Finisar as evidence of its ability to complete and execute large-scale mergers in the photonics sector while rapidly reducing overheads.

He said, “Together with Coherent, we would have the resources to continue to invest in a broad range of opportunities and deliver sustained growth for all shareholders. We also believe in the complementary fit, not only of our technology platforms and business models, but also of our people and company cultures.”

In a statement, Coherent said the latest II-VI bid was superior as defined in the most recent sale agreement it had negotiated with Lumentum, and that it will terminate its agreement with Lumentum if it doesn’t receive an offer at least equal in value to that of II-VI by 11:59 pm Pacific Time on Monday, March 22, 2021. Under the terms of its original agreement with Lumentum, Coherent would be required to pay a US$217.6 million termination fee to Lumentum if enters into an agreement with II-VI.

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This article was written
by Peter Dykes

Peter Dykes is a independent telecoms and technology journalist who has over that last 30 years written for a wide range of B2B publications and companies. A former BT engineer, he specialises in networks and associated support systems. He is currently Editor of Optical Connections.