Coherent stockholders would receive $220 per share in cash and 0.61 shares of Lumentum for each share of Coherent they own under the terms of the new proposal.
The $6.9 billion offer is up from the previous bid that valued Coherent at $6.6 billion.
"Our Board of Directors remains steadfast in our belief that the combination of Lumentum and Coherent will create a diversified industry leader best positioned to accelerate the future of photonics," said Lumentum CEO Alan Lowe.
Lowe said the company also raised its previous synergy estimates from the proposed combination to $244 million from $219 million.
Last week, MKS Instruments (MKSI) abandoned its bid to buy Coherent after Coherent chose a proposal to be acquired by II-VI (iiVI) , which makes engineered materials. At the time, Coherent set a deadline by which Lumentum, with which it already had an accord to be acquired by, had to at least match II-VI's offer.
As part of Lumentum's revised proposal, private equity group Silver Lake will make a $1 billion equity investment in the combined company.
"We believe strongly in the potential of the increased scale, expanded portfolio, and bolstered capabilities of the proposed combination and look forward to supporting Alan and the management team as investors and a member of the Board," said Silver Lake managing partner Ken Hao.
Coherent shares were rising 3.3% to $257 per share pre-market, while Lumentum shares were falling 2.4% to $88.