Coherent's Silicon Carbide Semiconductor Business To Get $1 Bln Investment From Denso, Mitsubishi

(RTTNews) - Coherent Corp. (COHR), an engineered materials manufacturer, announced on Tuesday that Denso Corp (DNZOY.PK) and Mitsubishi Electric Corp (MIELY.PK) have agreed to invest $1 billion in its silicon carbide business.

Under the transaction terms, both Denso and Mitsubishi will invest $500 million each in exchange for a 12.5 percent non-controlling ownership interest in the business. Coherent will own the remaining 75 percent.

The company will also separate and contribute the business to a subsidiary. The business will enter into long-term supply agreements with Denso and Mitsubishi Electric to support their demand for 50 mm and 200 mm silicon carbide or SiC substrates and epitaxial wafers.

"Over the past two years, Coherent has invested aggressively in capital and R&D for SiC as part of its 10-year, $1 billion commitment announced in August 2021. Specifically, the investment will fund the manufacturing expansion of the business's substrates and epitaxial wafers and, in combination with the concurrent supply agreements, enhance its position in the market," the company said.

The company expects to use the investment to fund future capital expenditure requirements of the business.

The transaction is expected to close in the fourth quarter of 2024.

In premarket activity, Coherent shares are trading at $33.93 up 9.45% on the New York Stock Exchange.