(Reuters) – Laser and optical fiber specialist Lumentum Holdings Inc said on Tuesday it would acquire laser manufacturer Coherent Inc in a $5.7 billion deal, as it looks to penetrate deeper into the fast-growing laser and photonics market.
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Lumentum’s cash-and-stock deal for Coherent represents a 49% premium to the company’s closing stock price on Jan. 15.
Coherent stockholders will receive $100 per share in cash and 1.1851 shares of Lumentum common stock for each share held and are expected to own about 27% of the combined company.
Lumentum is known for producing wireless network components and its 3D sensing face recognition technology, which many analysts say powers Apple Inc’s Face ID, Animoji and portrait mode features.
The San Jose, California-based company plans to increase its share of the laser technology market through the acquisition. That market currently accounts for about 10% of Lumentum’s revenue.
The transaction is expected to close in the second half of 2021.
Lumentum shares ended 11% lower at $94.60 on Tuesday. Coherent shares jumped 29.7% to close at $197.01 in light volume.
Deutsche Bank served as financial adviser and provided debt financing to Lumentum, and Bank of America advised Coherent.
Both companies also reported quarterly preliminary results.
Reporting by Tiyashi Datta in Bengaluru and Krystal Hu in Florida; Editing by Shinjini Ganguli and Matthew Lewis