Merger In The Optical Space: II-VI To Buy Finisar In $3.2B Deal

Engineered materials and optoelectronic components company II-VI, Inc. (NASDAQ: IIVI) reached an agreement to acquire Finisar Corporation (NASDAQ: FNSR), a fellow optical communications company, for $3.2 billion.

What Happened

II-VI said in a press release it will acquire Finisar through a combination of stock and cash which values the Apple Inc. (NASDAQ: AAPL) supplier at $26 per share. The strategic rationale behind the merger are four-fold:

A stronger position to market next-generation products including 5G.

• Generate faster time to market for 3D sensing and LiDAR.
• Better access to larger markets like power electronics for electric cars.
• The ability to better maximize value creation through vertical integration.

Why It's Important

The emergence of "disruptive megatrends" require the use of lasers and other optical and engineered materials which creates a large growth opportunity for the two companies, Dr. Vincent D. Mattera, Jr., President and CEO, II-VI said in the release. The combination of the companies into one would create a new company that will be "better strategically positioned" to assume a strong leadership role in next-generation technologies.

What's Next

The transaction is expected to close in the middle of 2019 and remains subject to approval by shareholders of the two companies along with customary regulatory approval. Once the transaction is completed, Finisar investors will own 31 percent of the combined entity.

Finisar shares traded up more than 20 percent to $22.78 in the pre-market session.

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