II-VI buys Oclaro's Zurich-based semiconductor laser business
The $115 million transaction is an integral part of II-VI's strategy to participate broadly in laser systems across multiple applications.
Saxonburg, PA - II-VI Inc. has acquired the Zurich, Switzerland-based semiconductor laser business of Oclaro Inc. in a transaction valued at $115 million. II-VI will operate the new business as II-VI Laser Enterprise GmbH.
The acquisition provides II-VI with semiconductor laser technology used in industry-leading laser system products including fiber lasers and direct diode lasers for material processing, medical, consumer, and fiber optic communication applications. The gallium arsenide semiconductor laser business was originated by IBM Zurich and was integrated with the gallium arsenide semiconductor laser assets in Tucson, AZ, acquired from Newport Spectra-Physics in 2009.
"We are very pleased to complement II-VI's broad and differentiated portfolio of engineered materials with a world-class semiconductor laser platform enabling high-performance and high-reliability laser chips and modules addressing several growing markets." said Francis J. Kramer, president and CEO of II-VI Inc. "This acquisition is an integral part of II-VI's overall strategy, which is centered on a broad participation in laser systems across multiple applications. We will include the business in a new operating segment."
Kramer continued, "Our new Zurich-based operation has a rich history of technological innovation in the laser industry. We expect to increase the resources available to the team, enabling them to drive important new products for II-VI customers. We welcome our new employees to the II-VI family of companies."
At closing, II-VI paid $92 million in cash to Oclaro for the new business, while Oclaro retained $15 million in accounts receivable from the new business. Six million dollars is being held back by II-VI for 15 months from the date of the close and $2 million of cash is being held back by II-VI for potential working capital adjustments.
In addition to the acquisition of the new business, II-VI acquired an exclusive option to purchase Oclaro's amplifier and micro-optics business for $88 million in cash. This option, for which II-VI separately paid $5 million in cash, will expire if not exercised by II-VI within 30 days. If II-VI exercises this option and purchases the amplifier and micro-optics business, the option price will be applied to the purchase price of the amplifier and micro-optics business. If II-VI does not exercise this option, the $5 million option payment will be retained by Oclaro.
As part of the change in ownership of the new business, II-VI and Oclaro have entered into a multi-year supply agreement under which II-VI will provide semiconductor laser products to Oclaro's amplifier and micro-optic business. Further, II-VI and Oclaro have entered into certain transition service and manufacturing service agreements to allow the new business to continue operations during the ownership transition.
Deutsche Bank Securities Inc. served as exclusive financial advisor to II-VI in connection with the transaction.
II-VI Incorporated, a global leader in engineered materials and opto-electronic components, is a vertically-integrated manufacturing company that creates and markets products for diversified markets including industrial manufacturing, military and aerospace, high-power electronics, optical communications, and thermoelectronics applications.
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