8-KEarnings & ResultsMaterial AgreementsOther Events+1

Lumentum Holdings Inc. 8-K Report, Material Agreement (Jan 19, 2021)

Filed January 19, 2021For Securities:LITE

Summary

Lumentum Holdings Inc. (LITE) announced a significant development on January 19, 2021, with the filing of an 8-K detailing a definitive merger agreement to acquire Coherent, Inc. The transaction, structured as a two-step merger, will see Coherent shareholders receive a combination of cash and Lumentum common stock. This strategic acquisition aims to enhance Lumentum's market position and expand its product portfolio. The deal is valued at approximately $5.7 billion, considering the cash and stock components and assuming Coherent's current market capitalization. Lumentum plans to finance the acquisition through a mix of existing cash reserves, the issuance of its common stock, and new debt financing, including a $2.1 billion term loan facility. The transaction is subject to customary closing conditions, including regulatory approvals, stockholder approvals from both companies, and other standard conditions, and is not contingent on financing.

Key Highlights

  • 1Lumentum to acquire Coherent, Inc. in a $5.7 billion merger agreement.
  • 2Coherent shareholders will receive $100.00 in cash and 1.1851 shares of Lumentum common stock per share of Coherent common stock.
  • 3The acquisition will be financed through existing cash, Lumentum stock, and approximately $2.1 billion in new debt, including a committed term loan facility.
  • 4The transaction structure involves a two-step merger process.
  • 5Both Lumentum and Coherent's Boards of Directors have unanimously approved the merger agreement.
  • 6Closing conditions include regulatory approvals (including HSR, China, and South Korea), stockholder approvals from both companies, and other customary conditions.
  • 7Termination fees are outlined, with Coherent potentially paying $217.6 million and Lumentum potentially paying $337.7 million (or $279 million in specific antitrust scenarios).

Frequently Asked Questions

The total transaction value is approximately $5.7 billion, based on the cash and stock consideration per Coherent share and an estimated total number of Coherent shares outstanding. This figure includes the cash component, the value of Lumentum's common stock to be issued, and assumed Coherent debt.

Lumentum plans to fund the acquisition using a combination of approximately $1 billion in cash from its balance sheet, approximately $3.178 billion in Lumentum common stock, and approximately $2.1 billion in new debt. This new debt is expected to be provided through a senior secured term loan facility.

The merger is subject to several conditions, including obtaining necessary regulatory approvals (such as HSR in the U.S., and approvals in China and South Korea), approval from the stockholders of both Lumentum and Coherent, and the absence of any legal impediments or material adverse changes. The transaction is not subject to any financing condition.

Coherent's restricted stock units (RSUs) will generally be converted into Lumentum RSUs. The conversion will be based on the cash and exchange ratio specified in the merger agreement. Vesting acceleration benefits are provided for certain employees upon termination following the closing, under specific conditions. Director RSUs will fully vest and be converted into the merger consideration.