II‐VI Inc. (Nasdaq: IIVI) and Coherent, Inc. (Nasdaq: COHR) say that the State Administration for Market Regulation of the People’s Republic of China (SAMR) has finally provided antitrust clearance for II-VI’s pending acquisition of Coherent. With that final hurdle cleared, the two companies say the deal will close on or about July 1, 2022.
The two companies reached a sales agreement in March 2021 after several rounds of bidding against Lumentum and MKS Instruments (see “II-VI wins bidding for Coherent”). Under the terms of merger agreement, each share of Coherent common stock will be converted into the right to receive $220.00 in cash and 0.91 of a share of II-VI common stock, for a total deal value at the time of about $7 billion.
II-VI had expected to close the deal at the end of 2021. However, as was the case when the company acquired Finisar, getting SAMR to approve the deal (a requirement because the combined company will do business in China) proved more time-consuming than expected. Ironically, II-VI had stated the fact that there was less overlap between its product lines and those of Coherent in comparison to Lumentum would make getting SAMR approval easier.
When the agreement was announced, II-VI estimated the combined company will have annual revenues of approximately $4.1 billion initially, with the opportunity to further penetrate a combined addressable market of approximately $25 billion. The deal will be financed via a combination of cash on hand, $5.4 billion of fully committed debt financing, and a convertible preferred equity investment of at least $1.8 billion from Bain Capital, which will reduce leverage.
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