Lumentum Holdings Inc. today confirmed that on March 17, 2021, it delivered to Coherent, Inc.’s Board of Directors a revised proposal to acquire Coherent in a cash and stock transaction valued at $6.9 billion. Under the terms of the revised proposal, Coherent stockholders would receive $220.00 per share in cash and 0.6100 shares of Lumentum common stock for each Coherent share they own. Using Lumentum’s closing stock price as of March 16, 2021, this equates to a consideration of $275.00 per Coherent share. As part of Lumentum’s revised proposal, Silver Lake, the global leader in technology investing, will make a $1 billion equity investment in the combined company.
“Our Board of Directors remains steadfast in our belief that the combination of Lumentum and Coherent will create a diversified industry leader best positioned to accelerate the future of photonics,” said Alan Lowe, Lumentum President and CEO. “Based on additional work, we are confident that we can meaningfully exceed our prior synergy estimates and have identified an estimated $219 million to $244 million of annual run-rate synergies. We are pleased to now pursue this combination with the support of Silver Lake, whose investment is a compelling indicator of the power of this transformative opportunity. We look forward to combining the talented teams at Coherent and Lumentum at a time when global markets are increasingly relying on photonics products and technologies.”
“We are very familiar with Lumentum and Coherent and have a clear line of sight into the unique breadth of opportunity created by this combination,” said Ken Hao, Chairman and Managing Partner, Silver Lake. “We believe strongly in the potential of the increased scale, expanded portfolio, and bolstered capabilities of the proposed combination and look forward to supporting Alan and the management team as investors and a member of the Board.”
Lumentum’s Board of Directors continues to recommend the transaction with Coherent to its stockholders.
Transaction Terms, Financing, Governance and Approvals
Lumentum intends to finance the cash portion of the transaction through a combination of cash on hand from the combined company’s balance sheet, $3.25 billion in new debt financing from a fully committed Term Loan B and the $1 billion equity investment from Silver Lake.
Under the terms of its investment, Silver Lake will purchase $1 billion in shares of a newly designated 0% Series A Convertible Preferred Stock of Lumentum (the “Series A Preferred”), with a purchase price of $1,000 per share. The Series A Preferred will be convertible into shares of Lumentum’s common stock at a conversion price of $92.42 per share. The investment by Silver Lake is subject to customary closing conditions. Additional information regarding the investment and the Series A Preferred will be included in a Form 8-K to be filed by Lumentum with the Securities and Exchange Commission.
Two members of the Coherent Board and one member of Silver Lake will be appointed to the Lumentum Board, which would be expanded to ten directors, at the closing of the transaction.
The waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, expired on March 3, 2021 with respect to the proposed acquisition of Coherent. The expiration of the waiting period under the HSR Act satisfies one of the conditions to the closing of the pending transaction. The transaction is expected to close in the second half of calendar year 2021, subject to approval by Lumentum’s and Coherent’s stockholders, receipt of remaining regulatory approvals and other customary closing conditions.