What was the total value of the Lumentum-Oclaro acquisition?

Lumentum expects the total transaction consideration to be approximately $1.5 billion, funded by $500 million in Lumentum common stock, $500 million in new debt, and the remainder from cash balances of the combined company.

How was the acquisition financed?

The acquisition was financed through a combination of Lumentum common stock, a new $500 million senior secured term loan facility, and existing cash balances of the combined company.

What is the interest rate structure for the new $500 million term loan?

The term loans bear interest at either a base rate or an adjusted LIBOR rate, plus an applicable margin. Initially, the margin is 2.50% for LIBOR loans and 1.50% for base rate loans. This margin adjusts based on Lumentum's first lien net leverage ratio after the first full fiscal quarter following the closing date.

Will Oclaro shareholders face any tax implications from the merger?

Yes, Lumentum has determined that the transaction is likely to be fully taxable to Oclaro stockholders, regardless of whether a second-step merger occurs.

LITE 8-K: Leadership Changes, Acquisitions & Dispositions & More

Summary

This Form 8-K filing from Lumentum Holdings Inc. (LITE) announces the closing of its acquisition of Oclaro, Inc., a significant strategic move for Lumentum. The transaction was completed on December 10, 2018, with Oclaro shareholders receiving a combination of cash and Lumentum stock. This acquisition is expected to be fully taxable to Oclaro shareholders. In conjunction with the acquisition, Lumentum also entered into a new $500.0 million senior secured term loan facility to help finance a portion of the merger consideration and associated costs. The filing details the terms of this new debt facility, including interest rates, amortization, and covenants. Additionally, the company announced the appointment of Ian Small to its Board of Directors as part of the merger agreement.

Key Highlights

1Lumentum Holdings Inc. has successfully closed its acquisition of Oclaro, Inc. on December 10, 2018.
2The acquisition consideration for Oclaro shareholders included $5.60 in cash and 0.0636 shares of Lumentum common stock per Oclaro share.
3Lumentum secured a new $500.0 million senior secured term loan facility to partially fund the acquisition and related expenses.
4The term loan facility has a maturity of seven years and bears interest at a variable rate based on LIBOR or a base rate plus an applicable margin.
5The acquisition is expected to be fully taxable to Oclaro stockholders, with Lumentum opting not to pursue a tax-free reorganization structure.
6Ian Small has been appointed to Lumentum's Board of Directors, effective immediately after the merger's completion.
7The filing also includes customary covenants and events of default related to the new credit agreement.

Lumentum Holdings Inc. 8-K Report, Material Agreement (Dec 10, 2018)

Summary

Key Highlights

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