Houlihan Lokey Advises DENSO on Its Minority Investment in Coherent's SiC Business

Houlihan Lokey is pleased to announce that DENSO Corporation (DENSO) has made a Strategic Minority Investment of US$500 million in Silicon Carbide LLC (SiC LLC), the SiC business of Coherent Corp. (Coherent). Houlihan Lokey acted as the sole financial advisor to DENSO.

Founded in 1949 and headquartered in Aichi, Japan, DENSO is the world’s second-largest automotive parts company with around US$49 billion in market capitalization and around US$47 billion in annual sales for the fiscal year ended March 31, 2023.

Founded in 1971 and headquartered in Pennsylvania, Coherent develops, manufactures, and markets engineered materials, optoelectronic components, and devices worldwide and has around US$4.7 billion in market capitalization and around US$5.2 billion in annual sales for the year ended June 30, 2023. Coherent is the second-largest player in SiC wafers globally and is known for its global leading 200mm wafers.

From 2021 to 2025, DENSO aims to increase its electrification revenues from around US$5.2 billion in 2021 to around US$6.9 billion in 2025, exceeding market growth. This growth will primarily be driven by inverters for electric vehicles for which DENSO has the leading global market share, with annual shipments of around 3 million units in 2021.

Through its investment in SiC LLC, which has an excellent track record in SiC wafer quality and mass-production capabilities, DENSO will secure a stable supply of quality 150mm and 200mm SiC substrates. This will further strengthen the competitiveness of DENSO’s inverters.

DENSO will have a co-investor, Mitsubishi Electric (MELCO), which will also invest US$500 million.

This transaction marks Houlihan Lokey’s third announced transaction with DENSO in the past 12 months, demonstrating its close relationship with senior management and distinguished sector expertise in the semiconductor and automotive markets. We successfully executed multiple workstreams, including negotiating the investment agreement, long-term supply agreement, transition service agreement, and shareholder agreement. Highlights of the DENSO/MELCO investment also include:

• It is the second largest Japanese transaction in the electronic components industry.
• It is the second-largest Japan-U.S. transaction in YTD 2023.