II-VI Incorporated (Nasdaq: IIVI), a global leader in engineered
materials and optoelectronic components, today announced that it is
entering into a definitive agreement with Coherent, Inc. (Nasdaq:
COHR), one of the world's leading providers of lasers, laser-based
technologies and laser-based system solutions, under which II-VI
will acquire all outstanding Coherent shares in a cash and stock
transaction. Under the terms of the transaction, Coherent
shareholders will receive $220.00 in cash and 0.91 of a share of
II-VI common stock for each Coherent share.
“We are pleased to have reached an agreement with Coherent to
create a global leader in photonic solutions, compound
semiconductors and laser technology and systems. Together, we will
have significant opportunities to accelerate our growth through
complementary technology platforms, strengthen our competitiveness
by using our combined scale across the value chain, benefit from
deeper market intelligence and expertise, and further diversify our
businesses by end market and geography. Moreover, the combination
of II-VI and Coherent will increase our collective exposure to
irreversible megatrends for decades to come. We are excited to
welcome the talented Coherent team to II-VI and look forward to
working together to deliver significant value to all stakeholders,
including both companies’ shareholders, customers, employees, and
business partners,” said Dr. Vincent D. Mattera, Jr., Chief
Executive Officer of II-VI.
Compelling Strategic and Financial
Rationale
- Creates a global leader of greater scale to address
irreversible megatrends: Together, II-VI
and Coherent will create a global leader in photonic solutions,
compound semiconductors, and laser technology and systems with
approximately $4.1 billion in annual revenue, leveraging disruptive
technology platforms operating at scale to address a combined
available market of approximately $25 billion.
- Accelerates growth through complementary technology
platforms: II-VI’s and Coherent’s
complementary lasers, optics, and electronics technologies at the
subsystems and systems level will enable compelling solutions to
accelerate growth in aerospace and defense, life sciences, and
laser-additive manufacturing, while driving margin expansion and
profitability. In addition, a highly complementary geographic
presence will enable the company to accelerate growth in key
industrial markets in Asia.
- Increases competitiveness with combined scale across
the entire value chain: There are
substantial opportunities to utilize complementary scale at all
levels of the value chain and increase competitiveness in all laser
technology product lines, including in materials macro- and
micro-processing, display processing and instrumentation.
- Increases sales synergies by utilizing global service
as a distribution network: Coherent’s
service network, located in the largest manufacturing hubs in the
world, will act as a distribution channel for a broad combined
portfolio of components, including II-VI’s high-margin aftermarket
consumables, as well as a channel for recurring subsystems and
systems service contracts.
- Gains deeper market intelligence from complementary
business models: By harnessing our
combined expertise and strong global presence at all levels of the
value chain – including engineered materials, components, systems,
and services – we will gain deeper insights into laser end market
that will inform our strategic investments ahead of demand and
influence industry direction, which will lead to stronger customer
partnerships and higher returns on our investments.
- Accomplishes sustained growth from increased
diversification of combined leadership:
II-VI will have greater diversification of revenue by end market
and geography, cushioning short-term cycles and enabling sustained
strategic investments in new technology platforms to fuel long-term
growth.
- Generates significant cost synergies and
accretion: The combined company is
expected to achieve $250 million in annual cost synergies to be
realized within 36 months of close, and the transaction is expected
to be accretive to II-VI’s non-GAAP earnings per share in the
second year following close.
II-VI plans to finance the transaction with cash on hand,
approximately $5.4 billion in fully committed debt financing from
J.P. Morgan Securities LLC and an equity investment from Bain
Capital. Bain Capital has committed $1.5 billion in the combined
company at a conversion price of $85.00 per share and has confirmed
it is willing to increase this commitment by at least $300 million
of an additional $650 million optional amount on the same terms,
for a total commitment of at least $1.8 billion. The Bain Capital
investment will enable II-VI to significantly reduce leverage.
With their investment, Steve Pagliuca, Co-Chairman of Bain
Capital, is expected to join the II-VI board. Two current Coherent
directors are also expected to join the II-VI board upon
closing.
“We are thrilled to partner with Chuck and the II-VI management
team, who have outstanding operational experience and a strong
M&A track record,” said Steve Pagliuca, Co-Chairman of Bain
Capital. “The combination of II-VI and Coherent will create a
leading platform in the photonics industry. We are excited about
what this combined company will achieve in the years to come.”
The transaction, which is expected to close by year-end 2021 and
has been approved by both companies’ Boards, is subject to
customary closing conditions, including receipt of required
regulatory approvals and approval of II-VI and Coherent
shareholders.
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.
The presentation detailing the terms of the definitive agreement
can be viewed on the Company’s website at
www.ii-vi.com/investor-relations.
About II-VI Incorporated
II-VI Incorporated, a global leader in engineered materials and
optoelectronic components, is a vertically integrated manufacturing
company that develops innovative products for diversified
applications in communications, materials processing, aerospace
& defense, semiconductor capital equipment, life sciences,
consumer electronics, and automotive markets. Headquartered in
Saxonburg, Pennsylvania, the Company has research and development,
manufacturing, sales, service, and distribution facilities
worldwide. The Company produces a wide variety of
application-specific photonic and electronic materials and
components, and deploys them in various forms, including integrated
with advanced software to support our customers. For more
information, please visit us at www.ii-vi.com.
Forward-looking Statements
This press release contains forward-looking statements relating
to future events and expectations that are based on certain
assumptions and contingencies. The forward-looking statements are
made pursuant to the safe harbor provisions of the U.S. Private
Securities Litigation Reform Act of 1995. The forward-looking
statements in this press release involve risks and uncertainties,
which could cause actual results, performance or trends to differ
materially from those expressed in the forward-looking statements
herein or in previous disclosures.
The Company believes that all forward-looking statements made in
this release have a reasonable basis, but there can be no assurance
that management’s expectations, beliefs or projections as expressed
in the forward-looking statements will actually occur or prove to
be correct. Factors that could cause actual results to differ
materially from those discussed in the forward-looking statements
herein include, but are not limited to: (i) the failure of any one
or more of the assumptions stated above to prove to be correct;
(ii) the conditions to the completion of the business combination
transaction with Coherent (the “Transaction”) and the equity
investment by Bain, including the receipt of any required
stockholder and regulatory approvals, and the risks that those
conditions will not be satisfied in a timely manner or at all;
(iii) the occurrence of any event, change or other circumstances
that could give rise to an amendment or termination of the merger
agreement, including the receipt by Coherent of an unsolicited
proposal from a third party; (iv) the Company’s ability to finance
the Transaction, the substantial indebtedness the Company expects
to incur in connection with the Transaction and the need to
generate sufficient cash flows to service and repay such debt; (v)
the possibility that the Company may be unable to achieve expected
synergies, operating efficiencies and other benefits within the
expected time-frames or at all and to successfully integrate
Coherent’s operations with those of the Company; (vi) the
possibility that such integration may be more difficult,
time-consuming or costly than expected or that operating costs and
business disruption (including, without limitation, disruptions in
relationships with employees, customers or suppliers) may be
greater than expected in connection with the Transaction; (vii)
litigation and any unexpected costs, charges or expenses resulting
from the Transaction; (viii) the risk that disruption from a
Transaction materially and adversely affects the respective
businesses and operations of the Company and Coherent; (ix)
potential adverse reactions or changes to business relationships
resulting from the announcement, pendency or completion of the
Transaction; (x) the ability of the Company to retain and hire key
employees; (xi) the risks relating to forward-looking statements
and other “Risk Factors” discussed in the Company’s Annual Report
on Form 10-K for the fiscal year ended June 30, 2020 and additional
risk factors that may be identified from time to time in future
filings of the Company; (xii) the purchasing patterns of customers
and end-users; (xiii) the timely release of new products, and
acceptance of such new products by the market; (xiv) the
introduction of new products by competitors and other competitive
responses; (xv) the Company’s ability to integrate recently
acquired businesses and realize synergies, cost savings and
opportunities for growth in connection therewith, together with the
risks, costs and uncertainties associated with such acquisitions
and integration efforts; (xvi) the Company’s ability to devise and
execute strategies to respond to market conditions; (xvii) the
risks to anticipated growth in industries and sectors in which the
Company and Coherent operate; (xviii) the risks to realizing the
benefits of investments in R&D and commercialization of
innovations; (xix) the risks that the Company’s stock price will
not trade in line with industrial technology leaders; and (xx) the
risks of business and economic disruption related to the currently
ongoing COVID-19 outbreak and any other worldwide health epidemics
or outbreaks that may arise. The Company disclaims any obligation
to update information contained in these forward-looking statements
whether as a result of new information, future events or
developments, or otherwise.
No Offer or Solicitation
This document shall not constitute an offer to sell or the
solicitation of an offer to buy any securities, nor shall there be
any sale of securities in any jurisdiction in which the offer,
solicitation or sale would be unlawful prior to the registration or
qualification under the securities laws of any such jurisdiction.
No offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the U.S.
Securities Act of 1933, as amended.
Additional Information and Where to Find
It
This communication does not constitute an offer to buy or
solicitation of an offer to sell any securities. This communication
relates to a proposal that II-VI has made for a business
combination transaction with Coherent. In furtherance of this
proposal and subject to future developments, II-VI and Coherent may
file one or more registration statements, proxy statements, tender
offer statements or other documents with the SEC. This
communication is not a substitute for any proxy statement,
registration statement, tender offer statement, prospectus or other
document II-VI and/or Coherent may file with the SEC in connection
with the Transaction. INVESTORS AND SECURITY HOLDERS OF II-VI AND
COHERENT ARE URGED TO READ THE PROXY STATEMENT(S), REGISTRATION
STATEMENT, TENDER OFFER STATEMENT, PROSPECTUS AND/OR OTHER
DOCUMENTS FILED WITH THE SEC CAREFULLY IN THEIR ENTIRETY IF AND
WHEN THEY BECOME AVAILABLE AS THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT THE TRANSACTION. Any definitive proxy
statement(s) or prospectus(es) (if and when available) will be
mailed to stockholders of II-VI and/or Coherent, as applicable.
Investors and security holders will be able to obtain free copies
of these documents (if and when available) and other documents
filed with the SEC by II-VI through the web site maintained by the
SEC at www.sec.gov, and by visiting II-VI’s investor relations site
at https://ii-vi.com/investor-relations/.
Participants in the
Solicitation
This communication is neither a solicitation of a proxy nor a
substitute for any proxy statement or other filings that may be
made with the SEC. Nonetheless, II-VI and its directors and
executive officers and other members of management and employees
may be deemed to be participants in the solicitation of proxies in
respect of the Transaction. You can find information about II-VI’s
executive officers and directors in II-VI’s proxy statement for its
2020 annual meeting, which was filed with the SEC on September 29,
2020 and in II-VI’s Annual Report on Form 10-K for the fiscal year
ended June 30, 2020, which was filed with the SEC on August 26,
2020. Additional information regarding the interests of such
potential participants will be included in one or more registration
statements, proxy statements, tender offer statements or other
documents filed with the SEC if and when they become available.
These documents (if and when available) may be obtained free of
charge from the SEC's website www.sec.gov, and by visiting II-VI’s
investor relations site at
https://ii-vi.com/investor-relations/.
CONTACTS:
InvestorsMary Jane RaymondChief Financial
Officerinvestor.relations@ii-vi.comwww.ii-vi.com/contact-us
MediaSard Verbinnen & CoGeorge Sard/Jared
Levy/David IsaacsII-VI-SVC@sardverb.com
Coherent (NYSE:COHR)
Historical Stock Chart
From Aug 2024 to Sep 2024
Coherent (NYSE:COHR)
Historical Stock Chart
From Sep 2023 to Sep 2024