ARIZONA DAILY STAR 6/4/09
California-based Oclaro Inc. has agreed to acquire the local Spectra-Physics operation of Newport Corp. as part of an asset-exchange deal.
Oclaro plans to consolidate some of Spectra-Physics’ laser diode manufacturing functions in Europe but will keep the Tucson operation as a technology center, an executive of San Jose-based Oclaro said.
“Tucson will remain a key product-design and technology center for the company,” said Yves LeMaitre, executive vice president and general manager of Oclaro’s advanced photonic solutions division.
The Spectra-Physics operation will remain at 3321 E. Global Road, though some manufacturing operations will likely be consolidated to Oclaro locations in Caswell, England, and in Zurich, Switzerland, LeMaitre said.
There likely will be some layoffs among the roughly 100 current employees at the Tucson Spectra-Physics plant, but the number won’t be known until consolidation plans are finalized, LeMaitre said.
“It’s going to be an intelligent consolidation. . . . It will not be a bloodbath,” he said.
Oclaro will retain Spectra- Physics general manager Scott Dunbar and other key management at the Tucson location, LeMaitre added.
Spectra-Physics employed about 200 people until mid2008, when the company said it would cut staff as part of a plan to move some operations to an Asian subcontractor.
Under the deal between the two publicly traded companies, Newport will acquire Oclaro’s New Focus business and its portfolio of products, including opto-electronics, highresolution actuators, optomechanics and tunable lasers.
Simultaneously, Oclaro will acquire Newport’s local Spectra Physics business.
As part of the transaction, Newport will pay Oclaro $3 million in cash to reflect differences in revenue levels of the two businesses, as well as to compensate Oclaro for the higher costs involved in moving the diode manufacturing business to its fabrication facilities in Europe.
Under the deal, Oclaro also will become a main supplier of high-power diodes to Newport. The transaction is expected to close within three to five weeks.
Contact Star Assistant Business Editor David Wichner at 573-4181 or dwichner@azstarnet.com.
Oclaro and Newport to Exchange Strategic Assets
Oclaro To Become Leading Merchant Supplier of High Power Laser Diodes; Newport to Purchase Oclaro New Focus Business
SAN JOSE, Calif., - June 03, 2009 -Oclaro, Inc. (NASDAQ: OCLR) today announced it has signed a definitive agreement with Newport Corporation (NASDAQ: NEWP). Under the terms of the agreement, Newport will acquire the New Focus business of Oclaro's Advanced Photonics Solutions division in exchange for the Newport Spectra Physics high power laser diodes business. Oclaro will also receive $3 million in cash proceeds which is expected to fund the substantial portion of related transition and integration costs.
Upon closing, the transaction will enable Oclaro to expand its High Power Laser Diode portfolio with a deeper expertise in systems and packaging to target higher value solutions in new markets. By leveraging the Newport product line, Oclaro's strong brand, chip design, technology innovation and world-class manufacturing infrastructure, Oclaro is positioned to become the largest merchant supplier to the high power laser diodes market. This portfolio has the potential to yield gross margins of 40% or better.
"Oclaro is executing on its strategy to become a predominant force in the fiber optics industry," said Alain Couder, president and CEO, Oclaro, Inc. "Through a series of strategic moves, Oclaro plans to leverage our core competencies to expand our leadership position in selected markets and accelerate the pace of photonics innovation. The high power laser diodes business is ideally aligned with Oclaro's business model, corporate growth strategy and core competencies. The consolidation of the Tucson fab into Oclaro's Caswell and Zurich fabs is expected to increase wafer volumes by about 30% and improve the gross margin for Oclaro's telecom products as well."
Oclaro was recently formed through the merger of Bookham and Avanex, completed in April 2009. The merger combined the optical components expertise of Bookham with the modules and subsystems expertise of Avanex, to create one of the largest suppliers of optical components, modules and subsystems to the fast growing long-haul and metro optical telecommunications markets.
The product line is complementary to Oclaro's single emitter and bars products and offers new growth opportunity for Oclaro in the medical and analytic, printing, and industrial applications in Japan and North America. The Newport Spectra Physics high power laser diode business and the Oclaro New Focus business are comparable in size, each with revenues between $20 million and $30 million in the twelve months ended March 31, 2009.
The agreement includes a 4-year supply agreement whereby Oclaro will be sole source supplier of diodes to Newport Spectra Physics for a one year period followed by majority allotment for the next three years. With no customer overlap, Oclaro expects the acquisition to be seamless to both Oclaro and Newport customers. Oclaro will purchase the operating assets of the Spectra Physics Tucson, Arizona facility, as well as the intellectual property of the diodes business, while Newport retains all obligations under the facility lease.
"With Oclaro as our trusted partner, Newport can focus on its own core competencies as a laser systems supplier," said Dave Allen, vice president and general manager, Spectra Physics Laser Division, Newport Corporation. "We chose Oclaro specifically as our outsourcing partner, due to their world-class chip design and manufacturing infrastructure. Those strengths combined with the Spectra Physics systems understanding and packaging expertise will create a power house in the high power laser diode business, ideally suited as the primary supplier to Newport."
The acquisition enhances Oclaro's core competencies and expertise in the design and packaging of optical chips and leverages Oclaro's existing state-of-the art global manufacturing infrastructure. Due to the process and manufacturing technology compatibility of the Newport Spectra Physics high power laser diode products with Oclaro's Zurich, Switzerland, and Caswell, England manufacturing sites, Oclaro can lower overall cost, and enhance its operating efficiencies through economies of scale, with greater factory utilization.
The transaction is subject to customary closing conditions and is expected to close early in the fiscal quarter ending September 26, 2009.
About Oclaro
Oclaro, with headquarters in San Jose, California, is a tier 1 provider of high performance optical components, modules and subsystems to the telecommunications market, and is one of the largest providers to metro and long haul network applications. Oclaro, the result of the combination of Bookham, Inc. and Avanex Corporation, leverages proprietary core technologies and vertically integrated product development to provide its broad customer base with cost-effective and innovative optical solutions. The company's Advanced Photonics Solutions Division is chartered with driving Oclaro's diversification and growth into new markets, leveraging Oclaro's strong brand, chip design and manufacturing expertise. Oclaro is a global company, with leading chip fabrication facilities in the U.K., Switzerland and Italy, and manufacturing sites in the US, Thailand and China.
Oclaro, the Oclaro logo and all other Oclaro product names and slogans are trademarks or registered trademarks of Oclaro, Inc. in the USA or other countries.
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