JDSU buying Picolight for $125m cash, stock

27 Feb 2007

JDSU is to buy VCSEL manufacturer Picolight for $115 million in stock and up to $10 million in cash.

JDSU, a developer of broadband and optical communications technology, today announced a definitive agreement to acquire Picolight, a manufacturer of optical pluggable transceivers. The transaction is expected to close in the fourth quarter ending June 30, 2007, subject to receipt of regulatory approvals.

Under the terms of the agreement, JDSU will acquire Picolight for approximately $115 million in JDSU stock, plus up to an additional $10 million in cash subject to the achievement of certain revenue targets during calendar year 2007.

JDSU says the acquisition supports its growth and margin expansion initiatives with a "best-in-class" vertically integrated manufacturing model. "The addition of Picolight's high-growth pluggable optics technology strengthens our ability to address the fast-growing market for optical interconnect applications in the datacenter, enterprise, storage area and metro networking markets," said the company statement.

According to a recent study by LightCounting, the market for 10 Gigabit Ethernet optical components used by enterprise-focused network equipment manufacturers, such as pluggable transceivers, is expected to grow from approximately $200 million in 2006 to over $650 million in 2010, at a 35% CAGR.

With more than one million small form-factor pluggable products shipped, Picolight has been a pioneer in developing the vertical cavity surface-emitting laser (VCSEL), a key technology used in high-speed and short-to-medium distance optical interconnects. The addition of Picolight's 850 nm and 1310 nm VCSEL-based transceiver products to JDSU's current data communications product portfolio brings innovative technology with the performance, reliability and manufacturability needed to address a wide range of markets.

"By adding Picolight's vertically integrated VCSEL-based transceivers, JDSU will offer our enterprise customers an even broader product portfolio and an exceptionally strong roadmap to address the steep demand for reliable data management and delivery," said Mike Ricci, senior VP of JDSU's optical communications group.

"This will put JDSU in an excellent position to meet existing and near-term requirements for 8 and 10 Gigabit network data management. By adding to our vertically integrated photonics platform, we also will provide our customers a clear pathway and solid foundation to scale to 100 Gigabits in the future."

"The combination of Picolight's VCSEL and datacom expertise with JDSU's global reach and resources will put a compelling new competitive presence in the market", added Steve Hane, Picolight president and CEO. "We believe we have an opportunity to alter the datacom optics landscape by creating a best-in-class product portfolio for datacenters and enterprise networks worldwide."