Coherent to sell aerospace and defense business to Advent for $400m

NEW YORK - Coherent Corp. (NYSE:COHR), whose stock has surged over 74% in the past year according to InvestingPro data, announced Wednesday it has reached a definitive agreement to sell its Aerospace and Defense business to private equity firm Advent for $400 million, as part of its strategic portfolio optimization.

The transaction, expected to close in the third quarter of 2025, will allow Coherent to focus on its core growth markets while using proceeds to reduce its $3.9 billion debt load, which the company says will be immediately accretive to earnings per share. With a current ratio of 2.47, InvestingPro analysis shows the company maintains strong liquidity with assets well exceeding short-term obligations.

The business being sold designs and manufactures optical and laser systems for defense applications, encompassing approximately 550 employees across 10 geographic sites. Following the closure, the unit will operate under a new name to be announced later.

"As part of our strategic portfolio optimization process, this transaction furthers our strategy to concentrate efforts on core growth markets and products," said Jim Anderson, CEO of Coherent, in a press release statement.

Shonnel Malani, Managing Partner at Advent, indicated plans to invest significantly in research and development to strengthen the business’s position in advanced laser and optical solutions. Advent, which manages over $94 billion in assets, has previous investments in the national security sector including Cobham, Ultra Electronics, and Maxar Technologies.

Coherent, founded in 1971, provides photonics technology to customers in datacenter, communications, and industrial markets, with operations in more than 20 countries.

The transaction remains subject to customary closing conditions.

In other recent news, Coherent Corp. has entered into a multiyear strategic supply agreement with Apple to produce vertical-cavity surface-emitting lasers (VCSELs) for devices like iPhones and iPads. These components will be manufactured at Coherent’s facility in Sherman, Texas. S&P Global Ratings has revised Coherent’s outlook to stable from negative, affirming a ’BB-’ issuer credit rating, citing strong demand for the company’s datacom transceivers, which contributed to a revenue increase of over 20% year-over-year as of the third quarter of fiscal year 2025. Benchmark has reiterated its Buy rating on Coherent, highlighting robust growth in the artificial intelligence and datacenter sectors, with major hyperscale capital expenditure expected to rise by approximately 40% year-over-year by 2025.

Additionally, Coherent has unveiled its Osprey femtosecond laser for medical applications, designed for use in optogenetics, microsurgery, and medical device manufacturing. This laser offers pulse energies up to 5 µJ with sub-350 femtosecond pulse widths. The company also launched a new line of disposable surgical fiber assemblies for precision medical applications, intended for both original equipment manufacturer integration and direct clinical use. These fiber assemblies are engineered to handle high-power laser energy for various surgical procedures, including laser lithotripsy and applications in urology and phlebology.

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