- Shares in II-VI (IIVI -18.9%) and Finisar (FNSR +15.5%) headed in opposite directions today after the former announced a deal to acquire Finisar at a 38% premium.
- That $3.2B deal is drawing some mixed reactions from covering analysts. DA Davidson weighs in on the deal from both perspectives, saying that it's a good, synergistic fit for II-VI at a reasonable price. And Finisar-covering analyst Mark Kelleher trimmed his rating to Neutral after the price boost today put it close to their fair value of $26. He rates odds of wrapping the deal at 50-50 considering a tricky Chinese regulatory approval lies ahead.
- Oclaro (OCLR -2.3%) and Lumentum (LITE -4.1%) have cleared all hurdles for their deal except Chinese approval, going on eight months now, he notes.
- MKM Partners' Michael Genovese says II-VI may be overpaying. "While we don't cover II-VI, we have a positive impression of the company, and we are somewhat surprised that it would add so much commodity-like Datacom sales to its mix," he writes while blinking at the size of the deal. He sees trading at a fairly wide spread, though, with China's approval not a certainty. The firm raised its FNSR target to $24 from $23.
- Loop Capital sees merit in the deal for II-VI and doesn't see a competing offer rolling in, and says synergy targets are conservative but not as conservative as some think: Communications business is only about 40% of II-VI revenue.
- Among other optical-equipment peers today: COHR -3.1%; IPGP -2.3%; AAOI -0.1%; FN -1.6%; ACIA -1.5%; LASR -1.6%.