II-VI has announced that it is acquiring Apple’s facial recognition Face ID system Finisar for $3.2 billion. Finisar manufactures the laser scanners for powering Apple Face ID on the newest iPhones. The acquisition — which was in cash-and-stock at a price of $26 per share or a 37.7% premium of Finisar’s closing stock price on Thursday — was announced on Friday.
According to AppleInsider, Finisar is the supplier for Apple’s vertical-cavity surface-emitting lasers (VCSELs) used in the TrueDepth cameras in the iPhone X, iPhone XS, iPhone XS Max, and iPhone XR. These lasers produce a depth map of the user’s face for the Face ID unlocking system. And it is also used for Portrait mode and Animoji / Memoji.
Apple is also an investor in Finisar. Specifically, Apple put $390 million into Finisar out of the billion-dollar Advanced Manufacturing Fund last year. To meet Apple’s demands for the components, the company set up a 700,000 square foot facility in Sherman, Texas.
“Disruptive megatrends driven by innovative uses of lasers and other engineered materials present huge growth opportunities for both of our companies,” said II-VI Incorporated’s president and CEO Dr. Vincent D. Mattera, Jr.. “In communications, materials processing, consumer electronics and automotive, we expect that the combination with Finisar will allow us to leverage our combined technology and intellectual property in InP, GaAs, SiC, GaN, SiP and diamond to achieve faster time to market, cost and scale. Together, we believe that we will be better strategically positioned to play a strong leadership role in the emerging markets of 5G, 3D sensing, cloud computing, electric and autonomous vehicles, and advanced microelectronics manufacturing.”
Following the acquisition, Finisar’s shareholders will own about 31% of the combined company once the deal is completed. The deal is expected to be closed in the middle of 2019 after regulatory approval.
The deal is expected to generate approximately $2.5 billion in annual revenue. And the companies will see $150 million in cost savings within three years of the deal closing.
“The combination of our state-of-the-art technology platforms, deep customer relationships, great assets and amazing talent will enhance our ability to hit market windows that won’t stay open for long,” added Finisar CEO Michael Hurlston. “This combination will accelerate our collective growth and will take advantage of the technology, products and manufacturing expertise that Finisar has uniquely developed over the course of its 30 year history.”
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