EX-99.1 2 d647918dex991.htm EX-99.1 EX-99.1

Exhibit 99.1 II-VI to Acquire Finisar Creates a Global Leader in Photonics and Compound Semiconductors November 9, 2018Exhibit 99.1 II-VI to Acquire Finisar Creates a Global Leader in Photonics and Compound Semiconductors November 9, 2018


Safe Harbor Statement This communication contains “forward-looking statements” within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements often address expected future business and financial performance and financial condition, and often contain words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “see,” “will,” “would,” “target,” similar expressions, and variations or negatives of these words. Forward- looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed in any forward-looking statements. Important factors that may cause such a difference include: (i) the ability of II-VI Incorporated (“II-VI”) and Finisar Corporation (“Finisar”) to complete the proposed transaction on the anticipated terms and timing or at all, (ii) potential litigation relating to the proposed transaction, (iii) inherent risks and costs associated with the integration of the businesses and achievement of the anticipated synergies, (iv) potential disruptions from the proposed transaction that may harm the parties’ respective businesses, (v) the ability of the parties to retain and hire key personnel, (vi) adverse legal and regulatory developments or determinations that could delay or prevent completion of the proposed transaction, and (vii) the ability of II-VI to consummate financing related to the transaction. Additional risks are described under the heading “Risk Factors” in II- VI’s Annual Report on Form 10-K for the year ended June 30, 2018, filed with the U.S. Securities and Exchange Commission (the “SEC”) on August 28, 2018, and in Finisar’s Annual Report on Form 10-K for the year ended April 29, 2018, filed with the SEC on June 15, 2018. These risks, as well as other risks associated with the proposed transaction, will be more fully discussed in a joint proxy statement/prospectus that will be included in a registration statement on Form S-4 to be filed by II-VI with the SEC in connection with the proposed transaction. Neither II-VI nor Finisar assumes any obligation to publicly provide revisions or updates to any forward looking statements, whether as a result of new information, future developments or otherwise, should circumstances change, except as otherwise required by securities and other applicable laws. Page 2Safe Harbor Statement This communication contains “forward-looking statements” within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements often address expected future business and financial performance and financial condition, and often contain words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “see,” “will,” “would,” “target,” similar expressions, and variations or negatives of these words. Forward- looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed in any forward-looking statements. Important factors that may cause such a difference include: (i) the ability of II-VI Incorporated (“II-VI”) and Finisar Corporation (“Finisar”) to complete the proposed transaction on the anticipated terms and timing or at all, (ii) potential litigation relating to the proposed transaction, (iii) inherent risks and costs associated with the integration of the businesses and achievement of the anticipated synergies, (iv) potential disruptions from the proposed transaction that may harm the parties’ respective businesses, (v) the ability of the parties to retain and hire key personnel, (vi) adverse legal and regulatory developments or determinations that could delay or prevent completion of the proposed transaction, and (vii) the ability of II-VI to consummate financing related to the transaction. Additional risks are described under the heading “Risk Factors” in II- VI’s Annual Report on Form 10-K for the year ended June 30, 2018, filed with the U.S. Securities and Exchange Commission (the “SEC”) on August 28, 2018, and in Finisar’s Annual Report on Form 10-K for the year ended April 29, 2018, filed with the SEC on June 15, 2018. These risks, as well as other risks associated with the proposed transaction, will be more fully discussed in a joint proxy statement/prospectus that will be included in a registration statement on Form S-4 to be filed by II-VI with the SEC in connection with the proposed transaction. Neither II-VI nor Finisar assumes any obligation to publicly provide revisions or updates to any forward looking statements, whether as a result of new information, future developments or otherwise, should circumstances change, except as otherwise required by securities and other applicable laws. Page 2


A Transformative Combination Communications, Automotive, Consumer Electronics, Materials Processing, Semiconductor Equipment, $2.5B Military, Life Sciences 1 End Markets Pro Forma Revenue $22B $570M 1 2 Pro Forma EBITDA Addressable Market 70 24K+ Employees Worldwide Locations Worldwide Diversified Global Footprint Note: Pro forma Revenue and EBITDA represents LTM 09/30/2018 for II-VI and LTM 07/29/2018 for Finisar. 1. Represents LTM 09/30/2018 for II-VI plus LTM 07/29/2018 for Finisar and includes $150mm run-rate synergies for EBITDA. EBITDA excludes amortization of intangibles, the impact of SFAS 123(R) stock-based compensation expense and one-time charges. 2. 2022 estimated market size. Includes 3D Sensing, Power Devices for Automotive and Wireless RF size from Yole, Optical Communications from Lightcounting and Ovum, Industrial Processing, Military, Life Sciences from Strategies Unlimited. Page 3A Transformative Combination Communications, Automotive, Consumer Electronics, Materials Processing, Semiconductor Equipment, $2.5B Military, Life Sciences 1 End Markets Pro Forma Revenue $22B $570M 1 2 Pro Forma EBITDA Addressable Market 70 24K+ Employees Worldwide Locations Worldwide Diversified Global Footprint Note: Pro forma Revenue and EBITDA represents LTM 09/30/2018 for II-VI and LTM 07/29/2018 for Finisar. 1. Represents LTM 09/30/2018 for II-VI plus LTM 07/29/2018 for Finisar and includes $150mm run-rate synergies for EBITDA. EBITDA excludes amortization of intangibles, the impact of SFAS 123(R) stock-based compensation expense and one-time charges. 2. 2022 estimated market size. Includes 3D Sensing, Power Devices for Automotive and Wireless RF size from Yole, Optical Communications from Lightcounting and Ovum, Industrial Processing, Military, Life Sciences from Strategies Unlimited. Page 3


Finisar at a Glance #1 Optical Components Market Leader Leading GaAs Platform for 3D Sensing and LiDAR DATACOM TELECOM 3D SENSING Broadest portfolio of optical modules § Enables data center § Enables optimal § Enables 3D Sensing and enterprise transmission in for consumer and network connectivity access, metro and automotive long-haul applications Differentiation via Vertical Integration § Key products include transceivers for 25G, § Key products include § Key product: VCSEL 100G and 400G WSS, OCMs, and arrays Engineering Innovation with ~2,000 tunable/coherent modules Patents Page 4Finisar at a Glance #1 Optical Components Market Leader Leading GaAs Platform for 3D Sensing and LiDAR DATACOM TELECOM 3D SENSING Broadest portfolio of optical modules § Enables data center § Enables optimal § Enables 3D Sensing and enterprise transmission in for consumer and network connectivity access, metro and automotive long-haul applications Differentiation via Vertical Integration § Key products include transceivers for 25G, § Key products include § Key product: VCSEL 100G and 400G WSS, OCMs, and arrays Engineering Innovation with ~2,000 tunable/coherent modules Patents Page 4


Strategic Window of Opportunity Now Combined broad base of talent, Right Technology + Right Team + Right Time technology and manufacturing enhances our ability to hit market windows today TAM ($B) Disruptive Megatrends Inflection Point CAGR 20% $20 $15 CAGR 16% Proliferation of Electric & Cloud Services $10 3D Sensing Autonomous Vehicles Window of 1 Opportunity $5 $- Growth in Mobile & Increased Data and 5G Communications 2018 2019 2020 2021 2022 Video Consumption Datacom TRx Telecom TRx ROADM 3DS & LiDAR RF Electronics Power Electronics Note: Market size forecast from Lightcounting, Ovum and Yole. Page 5Strategic Window of Opportunity Now Combined broad base of talent, Right Technology + Right Team + Right Time technology and manufacturing enhances our ability to hit market windows today TAM ($B) Disruptive Megatrends Inflection Point CAGR 20% $20 $15 CAGR 16% Proliferation of Electric & Cloud Services $10 3D Sensing Autonomous Vehicles Window of 1 Opportunity $5 $- Growth in Mobile & Increased Data and 5G Communications 2018 2019 2020 2021 2022 Video Consumption Datacom TRx Telecom TRx ROADM 3DS & LiDAR RF Electronics Power Electronics Note: Market size forecast from Lightcounting, Ovum and Yole. Page 5


II-VI and Finisar: History of Shared Culture and Values Quality Culture is Foundational Shared Value and Vision § 30+ Years of Innovation with over 2,700 patents § Commitment to Address Customer Needs from a Broad Product Portfolio § Leaders in Engineered Materials & Optoelectronic Devices Shared Model § Selective & Strategic Acquisitions § Successful Differentiation via Vertical Integration § Sustained Market Leadership The Perfect Match: History, Culture, Technology and Assets Page 6II-VI and Finisar: History of Shared Culture and Values Quality Culture is Foundational Shared Value and Vision § 30+ Years of Innovation with over 2,700 patents § Commitment to Address Customer Needs from a Broad Product Portfolio § Leaders in Engineered Materials & Optoelectronic Devices Shared Model § Selective & Strategic Acquisitions § Successful Differentiation via Vertical Integration § Sustained Market Leadership The Perfect Match: History, Culture, Technology and Assets Page 6


Transaction Strategic Rationale 1 Creates One of the Largest Photonics and Compound Semiconductor Companies with $2.5B of Revenue Combination Addresses Multiple Strong and Growing Markets Complementary Expertise in Datacom & Telecom Strengthens Position in Optical Communications Creates the Most Compelling 3D-Sensing and LiDAR platform with Faster Time to Market A Leader in Engineered Materials and Compound Semiconductors Expected to Achieve $150mm Run-Rate Cost Synergies within 36 months 1. Represents LTM 9/30/2018 for II-VI plus LTM 07/29/2018 for Finisar. Page 7Transaction Strategic Rationale 1 Creates One of the Largest Photonics and Compound Semiconductor Companies with $2.5B of Revenue Combination Addresses Multiple Strong and Growing Markets Complementary Expertise in Datacom & Telecom Strengthens Position in Optical Communications Creates the Most Compelling 3D-Sensing and LiDAR platform with Faster Time to Market A Leader in Engineered Materials and Compound Semiconductors Expected to Achieve $150mm Run-Rate Cost Synergies within 36 months 1. Represents LTM 9/30/2018 for II-VI plus LTM 07/29/2018 for Finisar. Page 7


1 One of the Largest Photonics & Compound Semiconductor Companies $2,547 $2,504 $1,931 $1,902 $1,542 $1,491 $1,292 $1,212 $319 $308 $294 $183 + Note: Dollars in millions. Lumentum pro forma for Oclaro. MKS pro forma for ESIO. 1. Represents LTM Revenue. Page 81 One of the Largest Photonics & Compound Semiconductor Companies $2,547 $2,504 $1,931 $1,902 $1,542 $1,491 $1,292 $1,212 $319 $308 $294 $183 + Note: Dollars in millions. Lumentum pro forma for Oclaro. MKS pro forma for ESIO. 1. Represents LTM Revenue. Page 8


Irreversible Megatrends I Addressing Multiple Strong and Growing Markets 3D Sensing Optical RF Electronics in Power Electronics & LiDAR Communications Wireless & Military For Green Energy GaAs | InP GaAs | InP | Si Photonics GaAs | GaN/SiC | Diamond SiC For electric vehicles For 3D sensing in For terrestrial, For 4G remote radio heads, 5G beam (EV/HEV), smart grid consumer electronics submarine & wireless power switching, solar & LiDAR in automotive optical infrastructure forming antennas & RF and datacenters military electronics and wind energy $2.9B $12.1B $1.1B 2022 Market $1.2B 2018-22 CAGR 26% 60% 13% 27% Source: 3D Sensing & LiDAR, Wireless RF and Power Electronics for Green Energy from Yole, Optical Communications from Lightcounting and Ovum. Page 9Irreversible Megatrends I Addressing Multiple Strong and Growing Markets 3D Sensing Optical RF Electronics in Power Electronics & LiDAR Communications Wireless & Military For Green Energy GaAs | InP GaAs | InP | Si Photonics GaAs | GaN/SiC | Diamond SiC For electric vehicles For 3D sensing in For terrestrial, For 4G remote radio heads, 5G beam (EV/HEV), smart grid consumer electronics submarine & wireless power switching, solar & LiDAR in automotive optical infrastructure forming antennas & RF and datacenters military electronics and wind energy $2.9B $12.1B $1.1B 2022 Market $1.2B 2018-22 CAGR 26% 60% 13% 27% Source: 3D Sensing & LiDAR, Wireless RF and Power Electronics for Green Energy from Yole, Optical Communications from Lightcounting and Ovum. Page 9


Complementary Expertise in Telecom and Datacom § Industry leader in Datacom transceivers for Hyperscale datacenters § Fixed & tunable transceivers for access & wireless optical infrastructure § Next-generation coherent transmission & submarine amplification § ROADM for optical transport: WSS, optical amplifiers, optical monitoring § Highly vertically integrated from engineered materials to subsystems Pump Laser Transceiver Amplifier Wavelength Selective Switch Product Portfolio Across Market Segments Page 10Complementary Expertise in Telecom and Datacom § Industry leader in Datacom transceivers for Hyperscale datacenters § Fixed & tunable transceivers for access & wireless optical infrastructure § Next-generation coherent transmission & submarine amplification § ROADM for optical transport: WSS, optical amplifiers, optical monitoring § Highly vertically integrated from engineered materials to subsystems Pump Laser Transceiver Amplifier Wavelength Selective Switch Product Portfolio Across Market Segments Page 10


Most Compelling Platform for 3D Sensing & LiDAR II-VI’s and Finisar's GaAs and InP Platforms = Enhanced competency in 3D Sensing and LiDAR § Optimization of R&D, Capital and Asset Utilization = Faster Time to Market § Vertically integrated 6 inch GaAs compound semiconductor platform, one of the largest in the world = RF Devices and advanced optoelectronic integration VCSEL Arrays 940nm DFB Lasers 3D Sensing Filters Wide Angle Mirror VCSEL Arrays For 3D Sensing & LiDAR CAGR (’18-22): +60% Source: Yole Page 11Most Compelling Platform for 3D Sensing & LiDAR II-VI’s and Finisar's GaAs and InP Platforms = Enhanced competency in 3D Sensing and LiDAR § Optimization of R&D, Capital and Asset Utilization = Faster Time to Market § Vertically integrated 6 inch GaAs compound semiconductor platform, one of the largest in the world = RF Devices and advanced optoelectronic integration VCSEL Arrays 940nm DFB Lasers 3D Sensing Filters Wide Angle Mirror VCSEL Arrays For 3D Sensing & LiDAR CAGR (’18-22): +60% Source: Yole Page 11


RF Electronics for Wireless Infrastructure & Military § II-VI’s GaAs & SiC on 6” platform + Finisar’s microelectronics design expertise = Access to larger & growing markets § Collaboration with SEDI for GaN/SiC RF electronics § For wireless & military: efficient, high power RF amplification with GaN/SiC HEMT § Thin-film diamond on silicon for next generation high speed wireless electronics SiC Substrates GaAs Epiwafers GaAs pHEMT 5G WIRELESS Beam-forming Antenna For 4G & 5G For RF Devices in Wireless For RF Applications in Wireless Antennas Handsets Military & Wireless 4G WIRELESS A world leading supplier of SiC substrates GaN/SiC for RF Electronics Remote Radio Head Market CAGR (‘18-’22): 26% Source: Yole Page 12RF Electronics for Wireless Infrastructure & Military § II-VI’s GaAs & SiC on 6” platform + Finisar’s microelectronics design expertise = Access to larger & growing markets § Collaboration with SEDI for GaN/SiC RF electronics § For wireless & military: efficient, high power RF amplification with GaN/SiC HEMT § Thin-film diamond on silicon for next generation high speed wireless electronics SiC Substrates GaAs Epiwafers GaAs pHEMT 5G WIRELESS Beam-forming Antenna For 4G & 5G For RF Devices in Wireless For RF Applications in Wireless Antennas Handsets Military & Wireless 4G WIRELESS A world leading supplier of SiC substrates GaN/SiC for RF Electronics Remote Radio Head Market CAGR (‘18-’22): 26% Source: Yole Page 12


Power Electronics for Green Energy § II-VI’s SiC on 6” platform + Finisar’s microelectronics design expertise = Access to larger & growing markets § High efficiency voltage and power conversion = SiC MOSFETs for Green Energy Applications § Electric cars (EV/HEV) § Solar & Wind Energy § Smart Grid Power Switching A world leading supplier of SiC substrates SiC for High Power Electronics HV Battery Electric Charger Market CAGR (’18-’22): 27% Source: Yole Bi-Directional Converter/ Inverter/ Electric Motor DC-DC Converter Page 13Power Electronics for Green Energy § II-VI’s SiC on 6” platform + Finisar’s microelectronics design expertise = Access to larger & growing markets § High efficiency voltage and power conversion = SiC MOSFETs for Green Energy Applications § Electric cars (EV/HEV) § Solar & Wind Energy § Smart Grid Power Switching A world leading supplier of SiC substrates SiC for High Power Electronics HV Battery Electric Charger Market CAGR (’18-’22): 27% Source: Yole Bi-Directional Converter/ Inverter/ Electric Motor DC-DC Converter Page 13


Combined Global Fab Footprint Zurich, Switzerland Newton Aycliffe, UK 117,000 sq. ft 319,000 sq. ft. GaAs - 6 inch GaAs - 6 inch Champaign, IL, USA Jarfalla, Sweden Warren, NJ, USA 69,000 sq. ft. 26,000 sq. ft 159,000 sq. ft. Epiwafers GaAs, InP, GaN up to 6 inch InP - 3 inch GaAs, GaN - 6 inch Allen, TX, USA 160,000 sq. ft. GaAs - 4 Inch Sherman, TX, USA 540,000 sq. ft. GaAs - 6 Inch Fremont, CA, USA 68,000 sq. ft. InP - 3 inch § A broad compound semiconductor technology platform encompassing GaAs, InP, SiC & GaN § One of the world’s largest 6-inch vertically integrated epitaxial growth and device fabrication manufacturing platforms § A global world-class team of experts and innovators in engineered materials, laser device design & fabrication infrastructure § Combined, the companies will offer highly differentiated products & manufacturing scale to serve fast growing markets Page 14Combined Global Fab Footprint Zurich, Switzerland Newton Aycliffe, UK 117,000 sq. ft 319,000 sq. ft. GaAs - 6 inch GaAs - 6 inch Champaign, IL, USA Jarfalla, Sweden Warren, NJ, USA 69,000 sq. ft. 26,000 sq. ft 159,000 sq. ft. Epiwafers GaAs, InP, GaN up to 6 inch InP - 3 inch GaAs, GaN - 6 inch Allen, TX, USA 160,000 sq. ft. GaAs - 4 Inch Sherman, TX, USA 540,000 sq. ft. GaAs - 6 Inch Fremont, CA, USA 68,000 sq. ft. InP - 3 inch § A broad compound semiconductor technology platform encompassing GaAs, InP, SiC & GaN § One of the world’s largest 6-inch vertically integrated epitaxial growth and device fabrication manufacturing platforms § A global world-class team of experts and innovators in engineered materials, laser device design & fabrication infrastructure § Combined, the companies will offer highly differentiated products & manufacturing scale to serve fast growing markets Page 14


Significant Value Creation Potential from Synergies Annual Estimated Synergies Achieved Within 36 months § Supply chain management - Procurement Cost of Goods Sold ~$85 million § Infeed - Internal supply of enabling materials and components § More efficient R&D with scale Research & Development § Complementary engineering and design teams § Consolidation of overlapping corporate costs ~$65 million General & Administration § Optimization of operating model § Savings from scale Sales & Marketing ~$150 million Total Page 15Significant Value Creation Potential from Synergies Annual Estimated Synergies Achieved Within 36 months § Supply chain management - Procurement Cost of Goods Sold ~$85 million § Infeed - Internal supply of enabling materials and components § More efficient R&D with scale Research & Development § Complementary engineering and design teams § Consolidation of overlapping corporate costs ~$65 million General & Administration § Optimization of operating model § Savings from scale Sales & Marketing ~$150 million Total Page 15


Transaction Overview § Approximately $3.2 billion of total equity value Transaction Consideration – Finisar shareholders to own approximately 31% of the combined company § $26.00 per share Per Share – $15.60 in cash and 0.2218 shares of II-VI common stock, valued at $10.40 per share based on the closing Consideration price of II-VI’s common stock of $46.88 on November 8, 2018 § $2.0 billion of new funded debt in the form of fully committed financing (in addition to unfunded revolver) Sources of § $1.0 billion of combined balance sheet cash Financing § $1.4 billion of equity issued to Finisar shareholders § Approval by II-VI and Finisar shareholders Approval Process § Regulatory approvals § Middle of calendar year 2019, subject to customary closing conditions Expected Timeline § $150mm of expected annual cost synergies realized within 36 months of close Financial Highlights § Expected to drive accretion in Non-GAAP earnings-per-share for the first full year post close of approximately 10% and more than double that thereafter Page 16Transaction Overview § Approximately $3.2 billion of total equity value Transaction Consideration – Finisar shareholders to own approximately 31% of the combined company § $26.00 per share Per Share – $15.60 in cash and 0.2218 shares of II-VI common stock, valued at $10.40 per share based on the closing Consideration price of II-VI’s common stock of $46.88 on November 8, 2018 § $2.0 billion of new funded debt in the form of fully committed financing (in addition to unfunded revolver) Sources of § $1.0 billion of combined balance sheet cash Financing § $1.4 billion of equity issued to Finisar shareholders § Approval by II-VI and Finisar shareholders Approval Process § Regulatory approvals § Middle of calendar year 2019, subject to customary closing conditions Expected Timeline § $150mm of expected annual cost synergies realized within 36 months of close Financial Highlights § Expected to drive accretion in Non-GAAP earnings-per-share for the first full year post close of approximately 10% and more than double that thereafter Page 16


Transaction Financing Transaction § $2.0 billion new funded debt, fully underwritten by BofA Merrill Lynch Financing – $450 million revolver unfunded at close 1 ($ in billion) x LTM EBITDA (w/ synergies) Pro-forma Gross Debt $2.4 4.1x Capitalization Cash $0.3 0.6x Statistics Net Debt $2.0 3.5x 1 § Taken together, company has EBITDA generation of $570mm Deleveraging and § Combined company has a strong deleveraging profile Capital Allocation § Ongoing ability to maximize strategic opportunities 1. Represents LTM 09/30/2018 for II-VI and LTM 07/29/2018 for Finisar and includes $150mm run-rate synergies. EBITDA excludes amortization of intangibles, the impact of SFAS 123(R) stock-based compensation expense and one- time charges. Page 17Transaction Financing Transaction § $2.0 billion new funded debt, fully underwritten by BofA Merrill Lynch Financing – $450 million revolver unfunded at close 1 ($ in billion) x LTM EBITDA (w/ synergies) Pro-forma Gross Debt $2.4 4.1x Capitalization Cash $0.3 0.6x Statistics Net Debt $2.0 3.5x 1 § Taken together, company has EBITDA generation of $570mm Deleveraging and § Combined company has a strong deleveraging profile Capital Allocation § Ongoing ability to maximize strategic opportunities 1. Represents LTM 09/30/2018 for II-VI and LTM 07/29/2018 for Finisar and includes $150mm run-rate synergies. EBITDA excludes amortization of intangibles, the impact of SFAS 123(R) stock-based compensation expense and one- time charges. Page 17