On November 8, local time in the United States, the two American optoelectronic device giants announced their merger. II-VI, a global leader in engineering materials and optoelectronic components, and Finisar, a global technology leader in optical communications, announced that the two parties have reached a final merger agreement. II-VI will acquire Finisar in cash and stock transactions with a stake value of approximately 32 One hundred million U.S. dollars.
According to the terms of the merger agreement unanimously approved by the boards of directors of the two companies, Finisar shareholders will receive a pro-rata cash of US $ 15.60 per share and 0.2218 times the common stock of II-VI, according to II-VI on November 8, 2018. At the closing price of $ 46.88 for common shares, the price per share was $ 10.40. The transaction price was $ 26.00 per share, or approximately $ 3.2 billion in equity value, a 37.7% premium to Finisar's closing price. Based on the price on November 8, 2018, Finisar shareholders will own approximately 31% of the combined company.
The combination of II-VI and Finisar unites two industry leaders with extremely high complementary capabilities and innovative strength to create a powerful industry-leading optoelectronics and compound semiconductor giant, which will better serve the rapidly growing communications and consumption Electronics, defense, industrial processing lasers, automotive semiconductor equipment and life sciences. Upon completion of the transaction, II-VI and Finisar will employ more than 24,000 employees in 70 locations worldwide.
"The disruptive megatrends driven by the innovative use of lasers and other engineering materials have created tremendous growth opportunities for our two companies," said Vincent D. VI, President and CEO of II-VI. Dr. Mattera said. "In the fields of communications, materials processing, consumer electronics and automotive, the combination of the company and Finisar will enable us to make full use of the complete technology and knowledge patents of InP, GaAs, SiC, GaN, SiP and diamond, shortening the time to market and reducing large-scale Cost. We believe we will better implement our strategic positioning and play a strong leadership role in emerging markets such as 5G, 3D sensing, cloud computing, electric and autonomous vehicles, and advanced microelectronics manufacturing. "
Dr Mattera continued, "We have long admired Finisar and paid great attention to its founder and his talented global team. Our company has a long-term commitment to innovation, creating breakthrough solutions, and enhancing high-quality products for our customers. We look forward to welcoming Finisar to join the II-VI family, which will further strengthen our competitive position in the industry. "
Finisar CEO Michael Hurlston said: "The combination of our state-of-the-art technology platform, deep customer relationships, quality assets and amazing talent will enhance our ability to open market windows, knowing that these windows will not stay open for long , And the merger will accelerate our overall growth and make better use of Finisar's unique technology and deep product manufacturing expertise in 30 years of history. "
Mr. Hurlston added: "We are very pleased to combine Finisar with II-VI to jointly establish leaders in the optoelectronics and compound semiconductor fields in the various markets we serve. We believe that the combined company has great growth potential, We believe that after the transaction is completed, our respective shareholders will be able to enjoy great value creation potential. "
Compelling strategic reasons
As a combined company, II-VI and Finisar will continue to leverage their cutting-edge innovation and commercialization of complex technologies to maximize value through vertical integration and manufacturing scale. The core competencies of the two companies in innovation and manufacturing will complement each other at all levels of the value chain, including the following strategic areas:
Greater advantages in the field of optical communications: The combined company will provide a full range and scalable supply of high-performance data communications transceivers, products based on coherent transmission technology, and ROADM solutions based on more than 30 years of industry leadership. It pushes products to the next generation of subsea, long distance and metropolitan area networks, hyperscale data centers and 5G fiber optic infrastructure.
Striking 3D sensing platform and LiDAR: GaAs and InP compound semiconductor laser design platform based on the leading position of optoelectronic technology, and one of the world's largest 6-inch vertical integrated epitaxial growth and device manufacturing platform, will accelerate the time to market More opportunities for 3D sensing and lidar.
Overall capability opens wider market: A broad portfolio of differentiated engineering materials, including GaAs, InP, SiC, GaN and diamond, as well as key optoelectronic, optical and integrated circuit device design expertise and related intellectual property, will be used in the next generation RF equipment market for wireless and military applications, as well as power electronics for electric vehicles and green energy.
Maximizing value creation through vertical integration: The deep vertical integration of core technologies from engineering materials to high value-added solutions (implemented by differentiated components) will provide a consolidated foundation for the combined company in order to make the overall market more Competitiveness.
Drive financial performance
In addition to compelling strategic benefits, the combination of II-VI and Finisar will:
Accelerating revenue growth: Based on the pro forma test, the combined company's annual revenue is approximately $ 2.5 billion. The broad base of talent, technology and manufacturing is expected to enhance our ability to better respond to near-to-mid-term opportunities and accelerate revenue growth.
Provide significant synergy potential: The combined company is expected to achieve $ 150 million in operating cost synergies within 36 months of closing. Synergies are expected to be achieved through procurement savings, internal supply of materials and components, effective research and development, integration of overlapping costs, and sales and marketing efficiency.
Enhanced earnings growth: The transaction is expected to increase non-GAAP earnings per share by approximately 10% in the first full year after the close and more than double thereafter.
Transaction details
II-VI plans to fund the cash consideration through cash on the combined company's balance sheet and $ 2 billion in financing debt financing. The transaction is expected to close in mid-2019, but subject to approval by shareholders of various companies, approval by antitrust regulators and other customary closing conditions.
Management and Board
Upon completion of the transaction, Dr. Mattera will continue to serve as President and CEO of the combined company. In addition, three Finisar board members will be appointed as members of the II-VI board upon completion of the transaction, and the committee will be expanded to 11 directors.