Coherent to sell Aerospace and Defense unit to Advent for $400mln, focuses on core growth markets and products.

Coherent Corp. has agreed to sell its Aerospace and Defense business to Advent for $400 million, aiming to reduce debt and boost EPS. The division, employing 550 people, develops optical and laser systems for defense applications. The deal is expected to close in Q3 2025, subject to regulatory approvals. Coherent will operate the unit under the Coherent brand until a new name is announced post-closing.

Title: Coherent Corp. Announces Sale of Aerospace and Defense Business to Advent for $400 Million

Coherent Corp. (NYSE: COHR) has announced a definitive agreement to sell its Aerospace and Defense business to Advent, a leading global private equity investor, for $400 million. The transaction, expected to close in Q3 2025, involves approximately 550 employees across 10 geographic sites. The proceeds will be used to reduce debt, which will be immediately accretive to Coherent's EPS. The sale aligns with Coherent's strategic portfolio optimization to focus on core growth markets.

The Aerospace and Defense business, which develops optical and laser systems for defense applications, will continue to operate under the Coherent brand until a new name is announced post-closing. The division's employees and operations will be integrated into Advent's portfolio, which includes investments in companies like Cobham, Ultra Electronics, and Maxar Technologies. Advent plans to significantly invest in R&D to strengthen the business's position in advanced laser and optical solutions.

The sale represents a strategic portfolio optimization that will have immediate positive financial implications. The transaction will be immediately accretive to EPS as the company plans to use the proceeds to reduce debt, improving its balance sheet and financial flexibility. The deal encompasses approximately 550 employees across 10 geographic sites, suggesting this is a substantial but focused segment of Coherent's overall operations.

For context, this transaction allows Coherent to concentrate its resources and management attention on its self-identified core growth markets, particularly in photonics applications for datacenter, communications, and industrial markets. This divestiture follows a common strategy among technology companies to streamline operations by selling non-core assets to specialized buyers who may derive greater value from them.

Advent, with its established presence in the national security sector, represents a strategic buyer with the industry expertise and capital to potentially grow this business more effectively than Coherent could while juggling multiple market segments. The expected closing in Q3 2025 provides reasonable time for regulatory approvals, which are typically scrutinized for defense-related assets.

The retention of the Coherent brand until closing indicates a thoughtful transition plan to maintain business continuity and customer relationships during the ownership change. This disciplined approach to portfolio management demonstrates management's commitment to optimizing capital allocation and focusing on areas where they believe Coherent has the strongest competitive advantages.

References:
[1] https://www.stocktitan.net/news/COHR/coherent-announces-agreement-to-sell-aerospace-and-defense-business-aun03advix6o.html