What are the key changes to the merger agreement with Coherent?

The primary change is to the merger consideration for Coherent stockholders. Under the Amended and Restated Merger Agreement, each share of Coherent common stock will be converted into $175.00 in cash and 1.0109 shares of Lumentum common stock. This updates the terms from the original merger agreement dated January 18, 2021.

How is Lumentum financing this acquisition?

Lumentum plans to finance the acquisition using approximately $2 billion from its existing cash reserves, $2.2 billion through the issuance of Lumentum common stock, and approximately $3 billion in new debt. The debt financing is supported by an Amended and Restated Commitment Letter from Deutsche Bank.

What are the conditions required for the merger to close?

The transaction is subject to several customary closing conditions. These include obtaining necessary approvals from the stockholders of both Lumentum and Coherent, the expiration or termination of waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act and other antitrust approvals (including from China and South Korea), and the effectiveness of a registration statement on Form S-4 for the Lumentum shares to be issued.

Are there any potential penalties if the deal is terminated?

Yes, the Amended Merger Agreement includes termination rights for both Lumentum and Coherent. If Coherent terminates the agreement to accept a superior proposal, it may owe Lumentum a termination fee of $217.6 million. Lumentum may owe Coherent a termination fee of $337.7 million under certain circumstances. A higher termination fee of $500 million may apply if the agreement is terminated due to a failure to obtain antitrust approval from a Chinese governmental entity.

LITE 8-K: Material Agreements

Summary

Lumentum Holdings Inc. (LITE) has filed an 8-K detailing an Amended and Restated Agreement and Plan of Merger with Coherent, Inc. This amendment significantly alters the terms of the previously announced acquisition. The key change is the revised merger consideration for each share of Coherent common stock, which will now consist of $175.00 in cash plus 1.0109 shares of Lumentum common stock, a change from the original deal structure. This update signifies ongoing negotiations and adjustments to the acquisition terms, which investors should closely monitor for potential impacts on Lumentum's financial position and future growth prospects. The filing also outlines the financing structure for the transaction, which will be a combination of approximately $2 billion in cash from existing balances, $2.2 billion in Lumentum common stock, and $3 billion in new debt. This debt component is to be facilitated by an Amended and Restated Commitment Letter from Deutsche Bank. The transaction requires approval from both Lumentum and Coherent stockholders, as well as regulatory approvals, including antitrust clearances in various jurisdictions. Investors should pay attention to the closing conditions and potential termination fees, which include significant amounts if the deal falls through under certain circumstances.

Key Highlights

1Lumentum has entered into an Amended and Restated Merger Agreement with Coherent, Inc., revising the terms of their acquisition.
2The revised merger consideration per Coherent share is $175.00 in cash plus 1.0109 shares of Lumentum common stock.
3The transaction is to be financed through a combination of cash on hand, newly issued Lumentum stock, and approximately $3 billion in new debt.
4Lumentum has secured an Amended and Restated Commitment Letter from Deutsche Bank for the $3 billion senior secured term loan facility.
5The deal requires approval from Lumentum and Coherent stockholders and various regulatory bodies, including antitrust clearances.
6Customary termination rights exist for both parties, with potential termination fees ranging up to $500 million under specified circumstances.
7Lumentum will add two designated members from Coherent's Board of Directors to its own board at closing.

Lumentum Holdings Inc. 8-K Report, Material Agreement (Mar 10, 2021)

Summary

Key Highlights

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