- The bidding war for Coherent has pushed it to the high end of fair valuation as a standalone company.
- The merger with II-VI should not create anticompetitive conditions. I am betting it will close as planned by year-end 2021.
- The traditional merger arb trade (long COHR, short IIVI) has profit potential of about 13%.
- Buying and holding II-VI would also return 13% if II-VI gets back to late February levels.
- Buying and holding Coherent would produce similar returns if II-VI appreciates but is subject to the risk of the merger not closing.
For further details see:
Coherent Looks Fully Valued But Merger Arb Potential Remains