Portland, Oregon -- Electro Scientific Industries Inc. (ESI, NASDAQ: ESIO), has bought French fiber lasers developer EOLITE Systems SA for $10 million in cash. With this takeover, ESI gains access to a fiber laser technology which can be used in a wide range of laser microfabrication applications.
ESI says the acquisition will enable it to customize lasers to specific applications for differentiated capability and lower cost. "By combining the higher power amplification capabilities of EOLITE with the flexible pulse technology from our PyroPhotonics division, we strengthen our ability to provide innovative solutions to our customers," explained Nick Konidaris, ESI president/CEO, in a statement. The company will continue to market both the offerings of its own PyroPhotonics division and EOLITE into the commercial market for solar, microelectronics, and industrial applications.
Pessac, France-based EOLITE was established in 2004 as a pulsed fiber laser technology specialist to the scientific and industrial communities. (The firm was originally called FEMLIGHT, renamed to EOLITE in 2007 and moved from Bordeaux to Pessac in 2008.) EOLITE's rod-type photonic crystal-based fiber laser technology was originally licensed from the U. of Bordeaux.
EOLITE's rod-based fiber laser technology enables higher power and increased energy storage vs. traditional flexible fibers, ideal for micromachining brittle substrates such as glass, ceramics, metals, and printed circuit boards, explains DA Davidson analyst Thomas Diffely in a research note. The combination with ESI's PyroPhotonics fiber laser unit (acquired in Sept. 2010) "should ultimately drive the creation of commercial applications that span industrial, microelectronics and solar end markets," he says. Needham & Co.'s James Ricchiuti agrees that EOLITE's addition provides a bit more vertical integration, and could help ESI capture more business for some competitive micromachining applications.
The deal also highlights ESI's "impressive balance sheet" (nearly $200 million in cash and investments as of March 31) from which it can tap to acquire key technologies for developing new products and expanding into new markets, according to Diffely. (He added that EOLITE has at about a $3M-$4M annual runrate, with ~$3M in expenses.) Ricchiuti points out, though, that ESI has maintained that balance-sheet strength for some time, and the firm has been methodical and judicious about acquisitions in the past.
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