Oclaro Buying Opnext

Optical communications and laser solutions provider Oclaro Inc. is buying optical modules and components maker Opnext Inc. in an all-stock transaction, the companies announced Monday. The transaction will make the combined company the largest supplier of laser diodes for industrial and consumer applications.

Under the agreement, Opnext shareholders will receive 0.42 shares of Oclaro stock for each share of Opnext stock, giving them an ownership stake of 42 percent in the new company. The combined company will be led by Oclaro Chairman and CEO Alain Couder, who will retain the same positions. Upon closing, Opnext Chairman and CEO Harry Bosco will join the combined company's board of directors.

The combined company is expected to achieve positive operating income in the first full quarter after the close, and cost savings from the merger are expected to total $35 million to $45 million within 18 months of the closing, after restructuring and integration costs of about $20 million to $30 million, the companies announced.

Oclaro was created in 2009 through the combination of Bookham and Avanex (See: Bookham, Avanex Form Oclaro). In mid-2009, Oclaro acquired the Spectra-Physics high-power laser diodes business from Newport Corp., while selling the company its New Focus line (See: Oclaro, Newport Trade Assets), and is now one of the largest suppliers of laser diodes and VCSEL lasers to industrial, consumer electronics and medical applications markets.

Opnext was formed out of the Fiber Optic Components business unit of Hitachi in 2000. In 2008, Opnext acquired privately held StrataLight Communications Inc. of Los Gatos, a manufacturer of 40-Gb/s line-side optical subsystems, for about $172 million.

Both companies were affected by the flooding in Thailand last year (See: The impact of Thailand’s epic flood continues into 2012).

"This merger clearly will be a unique and transformational opportunity for both Oclaro and Opnext," said Oclaro Chairman and CEO Alain Couder. "Our respective customers want to work with fewer, more strategic suppliers who can deliver the breadth of technologies they need. Through this merger, the companies' complementary and vertically integrated product portfolios, scale and heritage of technology innovation will put the merged company in that valued strategic partner and leadership role. By doing so, and at the same time saving significant costs, we also expect to generate substantially more long-term value for shareholders than either company could deliver alone."

The companies believe that the merger makes the combined company well positioned to capitalize on the trend toward convergence of the traditionally separate telecom and datacom networks in an effort to satisfy data-intensive applications such as video and cloud computing, and the proliferation of mobile devices.

The laser diodes market also is growing in industrial and consumer markets, and "the combined company is well positioned to accelerate innovation and inroads into these high-volume markets," the companies said in a statement announcing the deal.

The transaction is subject to customary closing conditions, including approval by the shareholders of both companies and regulatory approvals, and is expected to close within three to six months.

For more information, visit: www.oclaro.com or www.opnext.com