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Lumentum acquires Coherent for $5.7 billion to form combined photonics technology firm

Lumentum, a designer and manufacturer of optical and photonic products, has announced the acquisition of photonics developer Coherent in a transaction worth $5.7 billion. The move will bring both parties’ specialisms together to form a diversified photonics technology company that will seek new growth opportunities within the photonics sector.

The move will significantly expand Lumentum’s penetration of the $10 billion lasers and photonics market, and aims to deliver more than $150 million in annual recurring savings within two years of the transaction close. 

“Today’s announcement is an important advancement of Lumentum’s strategy,” said Alan Lowe, Lumentum President and CEO. “In our five years as a standalone public company, we have focused on developing the most innovative products and technology in our industry and partnering with market leading customers to help them compete and win in their markets.

“As we look ahead, we are thrilled to join forces with Coherent to create one of the world’s largest and most diverse photonics technology companies with leading positions in the growing market for photonics.”

Coherent’s 3D printing credentials

After observing “tremendous growth“ in the metal additive manufacturing sector back in 2018, Coherent acquired German industrial laser technology firm OR Laser, maker of the ORLAS Creator powder bed fusion (PBF)-based metal 3D printer. Through the acquisition, Coherent saw opportunities for process improvement in the types of lasers being applied within metal 3D printing.

Last year, Coherent partnered with dental CAD/CAM software developer exocad to simplify and improve the digital workflow of dental professionals. The collaboration sought to make the production of metal dental restorations more efficient through the development of a simple data interface between Coherent’s DENTAL COCKPIT slicer and exocad’s DentalDB software. The DENTAL COCKPIT 3D slicer was developed in 2019 for use with Coherent’s Creator metal PBF system.

With these additive manufacturing strengths in its portfolio, Coherent will now form the combined photonics company with Lumentum to unite their respective R&D capabilities, product lines, and customer application knowledge specific to the photonics market.

Andy Mattes, Coherent President and CEO, said of the decision: “We are excited to bring Coherent’s strength in OLED display manufacturing, semiconductor wafer inspection and life science instrumentation to Lumentum’s portfolio, to name but a few of the key applications we serve, and believe Lumentum’s experience and scale in world class photonics components and systems will accelerate Coherent’s vertical integration and addressable market expansion in several high growth areas, such as directed energy in defense and precision battery welding in automotive.”

Coherent CREATOR 3D printer. Photo via Coherent.
Coherent CREATOR 3D printer. Photo via Coherent.

Joining forces for photonics accleration

The combination brings together Coherent’s photonics and lasers businesses, active in the microelectronics, precision manufacturing, and aerospace and defense markets, with Lumentum’s telecom, datacom, and 3D sensing photonics businesses. The goal of the union is to form one diversified photonics technology firm that boasts increased scale and market reach within the sector, serving growing photonic-reliant sectors such as bioinstrumentation, advanced microelectronics, and next-generation consumer electronic devices, alongside the cloud and communications, electric and autonomous vehicles, and energy storage markets.

“Coherent brings one of the most recognizable and respected brands in the photonics industry and a very talented and innovative team,” said Lowe. “By increasing our scale, expanding our portfolio, and bolstering our R&D capabilities at a time when global markets are increasingly relying on photonics products and technologies, we are confident in our combined ability to pursue exciting new growth opportunities.”

Photonics is not only set to play an increasing role in the shift towards digital approaches to work and daily life, but also in addressing climate change, safety and security, and new approaches to health care. According to Coherent and Lumentum, the combination of their products and technologies “increases the intersection of the value chains” for these applications. The new company’s increased capabilities and resources will also drive future growth and new market opportunities within the photonics sector.

At the closing of the cash and stock transaction, which is expected to take place in the second half of 2021, Coherent stockholders will own around 27 percent of the combined company. At this point, the company expects to have a solid balance sheet and strong operating cash flows, while it hopes to increase efficiency and reduce redundancies. Two members of the Coherent Board will also be appointed to the Lumentum Board, which will be expanded to nine directors.

“Together, we expect to increase the pace of innovation, and to be at the forefront of the long-term market trends that are dependent on the capabilities of photonics,” added Lowe. “The combined company will also have a strong financial profile with a diversified revenue mix and significant synergy opportunities that will deliver enhanced value to our stockholders.”

COHERENT at formnext 2019. Photo by Michael Petch.
Coherent at formnext 2019. Photo by Michael Petch.

Photonics and 3Dprinting

While photonic applications are continually emerging and advancing, manufacturers such as Intel and Luxtera have been developing silicon photonics for nearly two decades, with Luxtera becoming the first to bring a mass-produced photonics technology to the market. There have since been further research breakthroughs for silicon photonics in regards to 3D scanning from MIT, with the development of new lidar-on-a-chip technology.

In 2019, R&D and technology accelerator Innovate UK opened a funding round for research on photonics technologies within advanced manufacturing, including 3D printing. Innovate UK also set up the EUREKA Network in Photonics in partnership with Photonics21 Mirror Group. Meanwhile, nano-scale 3D printing specialist Nanoscribe joined MiLiQuant, a three-year project aiming to develop diode laser-based light sources. Also involved in the project were Bosch, optics company Zeiss, and quantum technology specialist Q.ANT.

Nanoscribe most recently released a new photoresin which it claims will take the development of micro-optical elements “to the next level”, and which could be suited to optical communication products and photonic packaging. The firm previously introduced the Quantum X, a machine that uses two-photon lithography to fabricate nano-sized refractive and diffractive micro-optics as small as 200 microns.

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Featured image shows COHERENT at formnext 2019. Photo by Michael Petch.

COHERENT at formnext 2019. Photo by Michael Petch.
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