The laser manufacturer and developer Coherent has announced it will pay a $217.6 million fee to Lumentum in order to terminate their merger agreement. Coherent decided to pay the fee after receiving another bid from the optical material and semiconductor maker II-VI which valued the company at $7 billion.
The move appears to mark the end of an aggressive bidding war between Lumentum and II-VI which started in January and drove the price of the company up nearly 23% from Lumentum’s original offer of $5.7 billion. As part of the deal, II-VI has agreed to pay $220 in cash plus 0.91 shares for each share of Coherent stock.
Coherent’s lasers are often used as a component in OLED screens, which are commonly used in smartphones. II-VI is hoping to capitalize on that fast growing market, which should be boosted by the rollout of 5G.
II-VI is forecasting ~$250 million in annual synergies by 36 months after the acquisition closes, and the company expects the deal to be accretive to EPS non-GAAP EPS within two years.