Photop snaps up Oclaro filter business

26 Nov 2012

$27 million cash deal will see the thin-film filter operations in Santa Rosa, California, transfer to the II-VI subsidiary.

Optical component and module maker Oclaro is selling its thin-film filter and interleaver business units to Photop, part of the expanding II-VI empire.

II-VI will pay Oclaro $23 million for the two units once the deal is closed – expected December 3 – plus another $3 million before the end of this year, with an additional $1 million held in escrow until the end of 2013.

Based in a 33,000 square foot building in Santa Rosa, California, Oclaro’s thin-film filter unit comprises both a manufacturing facility and a research and development operation.

The thin-film product lines, initially developed for multiplexing and demultiplexing signals in fiber-optic communications, are increasingly used in biotechnology, life sciences and consumer displays. By selling the unit and the interleaver operation Oclaro says that it will be able to focus more effectively on its core areas of optical telecommunications and industrial photonics applications.

Core business "enhanced"
According to Oclaro, the product lines associated with the business transfer accounted for around $3.6 million in revenues in the latest quarter – just over 2% of the company’s total quarterly sales of $149 million.

II-VI CEO Francis Kramer said of the deal: “This acquisition will enhance Photop's core business while expanding [its] global footprint and diversification into the growing life sciences market. We look forward to the world class team at Santa Rosa becoming a part of II-VI.”

His Oclaro counterpart, Alain Couder, added: “The proceeds from these deals improve our balance sheet and give us additional operating flexibility to serve our global customer base.”

“The agreements also strengthen our existing relationships with II-VI and Photop, and will ensure customers in the telecom, life sciences and industrial markets continued access to these products as part of an even broader portfolio from a market leader.”

While the Santa Rosa unit will become part of Photop Technologies, Inc., the interleaver product line is being sold to subsidiary Photop Koncent. Both businesses are based at the company’s Fuzhou headquarters.

The deal represents just the latest in a series of acquisitions by II-VI, which snapped up Aegis Lightwave last year and the ceramics and precision motion specialist M Cubed Technologies earlier this month.

Back in August, analyst Mark Douglass from Longbow Research had urged the company to pursue such deals, writing in a research note on the company that II-VI should “continue to apply what we view as a strong balance sheet towards strategic acquisitions”.