Coherent Corp. Announces Divestiture of Materials Processing Tools Division

Coherent Corp. to Divest Materials Processing Tools Division in Strategic Realignment

Coherent Corp. (NYSE: COHR) has announced a definitive agreement to sell its product division specializing in tools for materials processing to Bystronic, a leading entity in sheet metal processing technology. This strategic divestiture, expected to finalize in early 2026 pending customary closing conditions, is a result of Coherent's ongoing portfolio review process.

Transaction Details and Financial Impact

The divested unit, based in Germany, employs approximately 400 individuals and generates an estimated $100 million in annual sales. This revenue represents less than 2% of Coherent's total annual revenue of $5.8 billion. The primary objective behind this transaction is to utilize the proceeds for debt reduction, which is anticipated to be immediately accretive to Coherent's earnings per share (EPS). Coherent currently carries approximately $3.9 billion in total debt, with a debt-to-equity ratio of 0.69, making debt reduction a significant strategic priority.

Strategic Rationale and Market Reorientation

Management has framed this sale as a pivotal step in sharpening the company's focus on core growth markets and products. Jim Anderson, CEO of Coherent, emphasized that this transaction advances their strategy to concentrate efforts on high-growth sectors such as AI Datacenters and advanced industrial applications. The company has previously outlined an ambitious long-term strategy, targeting double-digit revenue growth in these key markets. For fiscal year 2025, Coherent projects over 22% revenue growth and a 2.8X increase in EPS, underscoring the importance of streamlining operations to achieve these financial goals.

Broader Market Context and Implications

This divestiture by Coherent aligns with a broader trend among corporations to optimize their asset portfolios and strengthen balance sheets. Similar to LKQ Corporation's debt reduction efforts following its Self Service divestiture, Coherent's move to shed a non-core asset is expected to fortify its financial foundation. By reducing its debt burden, Coherent aims to enhance financial flexibility and allocate capital more effectively towards its stated high-growth initiatives. The sale through a Stock Purchase Agreement (SPA) ensures the transfer of the entire business unit, including its assets and liabilities, to Bystronic, with standard conditions such as regulatory approvals and accuracy of representations.

Outlook and Future Considerations

The transaction's expected closing in early 2026 provides a clear timeline for the strategic repositioning. Investors will be observing the execution of Coherent's revised strategy, particularly its performance in the AI Datacenter market and its ability to achieve projected revenue and EPS growth targets. The successful integration of the acquired division into Bystronic's operations will also be a key factor for the acquiring entity, BYS.SW.