Coherent’s stock jumps 3% premarket on news of $1 billion investment into its silicon carbide business

Coherent Corp.’s stock
COHR,
+12.10%
jumped 3.2% premarket Tuesday, after the materials, networking and lasers company said it has concluded a review of its silicon carbide business and will receive $1 billion in investments from Denso Corp.
6902,
+3.15%
and Mitsubishi Electric Corp.
6503,
+2.69%.
The Japanese companies will invest $500 million each and receive a 12.5% non-controlling stake in Pittsburgh-based Coherent. Coherent will own the remaining 75% stake and will separate it into a subsidiary. The business will continue to be run by Sohail Khan, Coherent’s EVP for new ventures and wide-bandgap electronics technologies. “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,” Coherent said in a statement. The stock has fallen 12% in the year to date, while the S&P 500
SPX,
+0.19%
has gained 13%.