Newport and Oclaro to exchange assets

Newport Corporation today announced it has signed definitive agreements with Oclaro Inc. for an exchange of assets and cash between the two companies. Under the terms of the agreements, Newport will acquire Oclaro's New Focus business and its portfolio of high-performance products that includes opto-electronics, high-resolution actuators, opto-mechanics, tunable lasers, vacuum and ultraclean solutions, and OEM-engineered solutions. Simultaneously, Oclaro will acquire Newport's high-power diode laser manufacturing operations, located in Tucson, Arizona.

Robert Phillippy, Newport's president and chief executive officer, said, "The New Focus acquisition brings a strong intellectual property position, a well-recognized brand, and a highly differentiated product portfolio to Newport. New Focus' product lines are an exceptionally good fit with Newport's existing offerings. New Focus' sales in 2008 were approximately $30 million, of which 70% consisted of products that will be integrated into our Photonics and Precision Technologies Division and marketed through our industry-leading product catalog and e-commerce website. Another 20% consisted of a family of tunable and single-wavelength lasers that we currently do not offer, and that will fit well with our Lasers Division. The remaining 10% of New Focus' 2008 revenues were from subsystems for OEM applications, primarily for semiconductor equipment manufacturing customers. While this market is currently at the trough of a deep cyclical downturn, it has performed well for both companies in the past and we believe that New Focus' OEM subsystems business has excellent upside potential over the longer term."

Newport noted that the majority of the photonics products being acquired are being manufactured at Oclaro's plant in Shenzhen, China, and will be transferred to Newport's facility in Wuxi, China, approximately doubling the manufacturing output of that facility. Lasers and electro-optical products that are currently manufactured by Oclaro in San Jose, California will be transferred to other Newport facilities.

The company reported that it expects the transaction to provide incremental profits of $5 million to $8 million in the first full year following the completion of integration.

As part of the transaction, Newport will pay Oclaro $3 million in cash to reflect differences in the revenue levels of the two businesses, as well as to compensate Oclaro for the higher costs involved in transitioning the diode manufacturing business to its fabrication facilities in Europe. In addition, the two companies will enter into an agreement for Oclaro to be a strategic supplier to Newport of high-power diodes for incorporation into its Spectra-Physics laser products. Both companies will provide transition-related services to the other during an integration period of six to twelve months.

Phillippy added, "From a strategic perspective, we are acquiring a portfolio of high-value photonics products and systems that serve our core markets, while exiting a diode laser business that is less aligned with the focus and profit model of our Lasers Division. Oclaro owns highly differentiated intellectual property in diode technologies and has significant design and manufacturing resources at its facilities in Caswell, England, and Zurich, Switzerland. By combining our diode laser business with theirs, we will have access to Oclaro's technology and manufacturing scale to purchase industry-leading diode lasers at very competitive price levels."

The transaction is subject to customary closing conditions and is expected to close within three to five weeks. The company noted that it will provide additional information about the expected impact of the transaction on its financial condition and future financial performance after the transaction is finalized.

Get All the Industrial Laser Solutions News Delivered to Your Inbox

Subscribe to Industrial Laser Solutions Magazine or email newsletter today at no cost and receive the latest news and information.

 Subscribe Now

Follow us at Join us on

Twitter - Industrial Laser Solutions

See Article Archive

View Industrial Laser Solutions past articles.

  •  
  •  
  •  
Copyright © 2007-2016. PennWell Corporation, Tulsa, OK. All Rights Reserved.PRIVACY POLICY | TERMS AND CONDITIONS