13 May 2003
US subsystem builder Avanex snaps up Alcatel Optronics plus a large portion of Corning's photonics technologies business.
The stock deal, which is valued at USD63.5 million, will swell the Fremont, California, company's payroll from around 120 to nearly 1600 initially. Subsequent restructuring, which will be financed by a combined USD130 million cash 'sweetener' from Corning and Alcatel, will likely see the number of employees cut.
Once finalized, Alcatel will retain a 28% share of Avanex, while Corning will own 17% of the stock. Under the terms of the transaction, Avanex will supply Alcatel with products over the next three years.
If the deal is approved by shareholders, Avanex will offer a much broader suite of optical components and subsystems, including active components such as lasers, amplifiers, detectors, and dispersion compensation modules. On the passive components side, it will be able to offer arrayed waveguide gratings and fiber Bragg grating filters.
The landmark deal, which mirrors the recent acquisitions of the optical components divisions of Nortel and Marconi by UK-based Bookham Technology, means that there will be two fewer companies selling optical components into the telecoms sector.
Avanex chairman Walter Alessandrini claimed that the move will propel the company into the big league: "These acquisitions position Avanex as an industry leader with a broad customer base," he said.
However, the company has some way to go to challenge the acknowledged market leader JDS Uniphase (JDSU). The combined sales of Avanex and its acquisitions is estimated at just USD23 million in the most recent financial quarter, and Avanex will instead rival Bookham in the second tier of components vendors. Bookham's sales hit USD33 million in its most recent quarter.
Like Bookham, Avanex enjoyed a highly-successful initial public offering (IPO) back in the telecoms boom of 2000. The cash generated then has enabled the two companies to remain solvent despite the ongoing downturn ravaging the industry.
For Alcatel, the sale of its optronics subsidiary marks the end of a turbulent period. The company has been looking to dispose of the business unit since the start of the year.
Corning, whose photonics division was largely made up from the former Pirelli optical components business it bought for USD3.6 billion in September 2000, also announced plans to shut its Lasertron pump laser facility in Bedford, Massachusetts by the end of the year. 150 jobs will be lost as a result.
Michael Hatcher is technology editor on Opto & Laser Europe magazine.