Oclaro and Opnext Merger Brings Great Consolidation to Optical Components

Oclaro and Opnext agreed to a merger, creating a leader in key components for core optical networking for long-haul, regional and metro DWDM, and positioned to become a leader in data communications for enterprises and
data centers, as well as industrial and consumer laser diodes market. The merger brings trans formative consolidation to the optical components market.


The deal is structured as a stock-for-stock tax-free exchange at fixed exchange ratio of 0.42x, with an implied pro forma ownership of 42% for Opnext and 58% for Oclaro.


The companies said their product sets are highly complementary with minimal overlap, and as a result there should be minimal changes to the existing portfolio.


Oclaro was formed in 2009 through the merger of Bookham and Avanex Corporation, both suppliers of optical networking components. Its product set includes tunable lasers, modulators, dispersion compensation components, wavelength selective switches, modules and sub-systems. In mid-2009, the company acquired the Newport Spectra Physics high power laser diodes business.


Opnext was established in September 2000 from the spinoff of Hitachi's Fiber Optic Components Business Unit. The new company was funded by the Clarity Group and Marubeni Group. The Opnext product line includes transceivers, pluggable modules (XENPAK, X2/XPAK, XFP, SFP+, SFP), TOSA/ROSA, and communications laser diodes and photodiodes; 40G muxponders, transponders, regenerators, tunable dispersion compensators, PMD compensators, and shelf controllers; and red laser diodes and infrared laser diodes.


Financially, the merger is expected to have a positive impact on gross margins and on operating margin. Both companies have been moving to an outsourcing model. Oclaro recently signed a definitive agreement to transition its internal assembly and test to Venture in Malaysia. On a non-flood basis, about 30% to 35% of Oclaro’s, and about 40% to 45% of Opnext’s assembly and test are with Fabrinet.


"This merger clearly will be a unique and transformational opportunity for both Oclaro and Opnext," said Alain Couder, chairman and CEO, Oclaro. "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."


Upon closing, the combined company will be led by Alain Couder, who will serve as chairman and CEO, and Harry Bosco will join the board of directors.
http://www.oclaro.com
http://www.opnext.com