Coherent Asks for Offers in Bidding War Next Week

The rare, three-party bidding war for laser-maker Coherent Inc. could be coming to a head soon.

The Santa Clara, California-based company has asked MKS Instruments Inc. and II-VI Inc. to submit final bids by late next week, according to people familiar with the matter.

They are competing with Lumentum Holdings Inc., which agreed to buy Coherent for about $5.7 billion last month. While Coherent’s board still recommends the Lumentum deal, it has said it’s engaging with MKS and II-VI following their offers.

Coherent’s plans aren’t final and could still change, the people said, asking not to be identified because the matter is private. There’s no guarantee MKS or II-VI will submit new offers.

Representatives for Coherent, MKS, II-VI and Lumentum declined to comment.

All three are offering cash and stock, which means the value of their bids fluctuates with the market. Lumentum’s agreement valued Coherent at about $226 per share when it was announced on Jan. 19. MKS’s offer was worth around $240 per share on its Feb. 8 proposal and II-VI’s was worth about $260 on its bid Feb. 12.

Coherent fell 1.4% to $246.72 at 10:48 a.m. in New York on Tuesday, giving the company a market value of about $6 billion. The bidding war has driven the stock more than 61% since Jan. 15, the last trading day before the Lumentum deal was announced.

If Coherent accepts one of the new offers, Lumentum would have a few days to decide whether to rebid, according to a filing. It is entitled to a breakup fee if Coherent terminates the deal.

Coherent started in a Palo Alto, California laundry room, where 55 years ago the company’s founders rigged a high-voltage outlet to a gutter pipe and created a laser. Months later, they were selling them.

Now it’s a leader in a specialized technology niche, supplying display-screen manufacturers as well as customers in the bioscience, aerospace and defense industries.

The scramble for it reflects the growing role lasers are playing in a new generation of energy-efficient, high-resolution display screens for mobile phones ad TVs as well as supplying other areas like health care and manufacturing.

The bidding war has attracted more than half a dozen Wall Street banks that have signed on as advisers as well as at least one private equity firm, Bain Capital, which was mentioned in II-VI’s public filings as having expressed interest in investing in the company as part of II-VI’s bid. A representative for Bain declined to comment.

©2021 Bloomberg L.P.

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