The decision came after Coherent chose a proposal to be acquired by II-VI IIVI, which makes engineered materials.
Coherent also set a deadline by which Lumentum must at least match II-VI's proposal. Coherent already has an accord in place to be acquired by Lumentum.
MKS shares recently traded at $153.80, up 0.5%; Coherent was at $239.50, up 1.8%, and II-VI was trading at $71.99, down 3.5%
In this three-way takeover battle, MKS last Friday submitted a revised offer to acquire all of Coherent. Under the terms, MKS would have paid $135 cash and 0.7516 of its shares for each Coherent share.
“We respect the Coherent board’s determination, though we are disappointed that they did not declare ours to be a superior offer,” MKS Chief Executive John Lee s said.
“We continue to believe that MKS is the best partner for Coherent, and our analysis with respect to synergies, leverage, and dilution gives us confidence that the near- and long-term value creation of our offer exceeds that of the competing offers. However, we remain disciplined acquirers.”
Under II-VI's revised proposal, each share of Coherent would be exchanged for $170 cash and 1.0981 II-VI common shares.
Coherent said that Lumentum now has until 11:59 p.m. Pacific Time on March 11 to submit a proposal that Coherent's board "determines to be at least as favorable to Coherent's stockholders from a financial point of view as II-VI's revised proposal." Otherwise, Coherent said it would end their merger agreement.
Lumentum’s proposal called for it to pay $175 cash and 1.0109 common shares for each Coherent share. Lumentum's deal also called for a "significantly higher" termination fee if Coherent were to accept a bid from another suitor.