In March 2021, II-VI (IIVI), a laser manufacturer, won a bidding war for Coherent (COHR), offering $220 cash and .91 shares for each of Coherent’s shares. At the time of the deal, II-VI disclosed the deal would close within nine months:

“The transaction, which is expected to close by year-end 2021…”

In May, II-VI reiterated the deal would close by year-end. In June, the company added language in a filing indicating the deal closure may slip into early 2022:

“....the companies believe the transaction is on track to close by year-end 2021 or at the beginning of the first calendar quarter of 2022.”

In its latest 10-K, II-V revealed additional slippage. Not only does II-VI indicate the deal will not close in 2021, the company suggests it’s no longer confident the deal will close at the beginning of the first quarter 2022. In its most recent annual report, II-VI extends the deal closure timeline by at least ninety days:

“...II-VI expects that the Merger will be completed by the end of the first calendar quarter of 2022.”

The acquisition must be approved by China’s State Administration for Market Regulation. Prior to the publication of this alert, Coherent shares were trading at a 9.8% discount to II-VI’s offer, down from the approximately 17% spread we observed in early August.

II-VI beat out several potential suitors for Coherent, including Lumentum (LITE), which in February thought it had won the battle for Coherent while simultaneously hinting at additional potential M&A activity in the space.