Tuesday, June 2, 2009

Oclaro and Newport to Exchange Strategic Photonic Assets

Oclaro (the new company formed through the recent merger of Bookham and Avanex) announced a definitive agreement with Newport to swap several strategic assets.

Under the deal, 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.

Oclaro said the exchange enables it to expand its High Power Laser Diode portfolio with a deeper expertise in systems and packaging to target higher value solutions in new markets. Upon closing, 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.

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. 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.