Engineering materials and optoelectronic components provider II-VI Inc of Saxonburg, PA, USA has signed an asset purchase agreement to acquire the optical amplifier and micro-optics business of Oclaro Inc of San Jose, CA, USA (which provides lasers and optical components, modules and subsystems for the optical communications, industrial, and consumer laser markets) in a transaction valued at $88.6m.
Previously, on 12 September, II-VI paid Oclaro $5m for an exclusive 30-day option to buy the business. II-VI will pay Oclaro $79.6m in cash on the effective date of closing (expected on or about 1 November, dependent on the receipt of certain regulatory clearances). The remaining $4m will be held back by II-VI until 31 December 2014, subject to traditional post-closing conditions.
Specifically, II-VI has purchased Oclaro's amplifier and related subsystems business, and its micro-optics product lines, including intellectual property, inventory and equipment. II-VI will also hire about 145 Oclaro staff, primarily located in Horseheads, NY, San Jose, CA and Shanghai, China. Revenue for the business was about $94m for the fiscal year ended 29 June 2013.
The acquisition of the business will complement the Zurich-based Oclaro Switzerland GmbH subsidiary and associated laser diodes business acquired by II-VI on 12 September for $115m, and is consistent with II-VI's strategy to focus on precision-engineered materials and opto-electronic component businesses. The business will be included in II-VI's Active Optical Products segment for financial reporting purposes.
"The sale of our amplifier business to II-VI is another important milestone in Oclaro's reinvention and return to financial stability," comments Oclaro's CEO Greg Dougherty. "This transaction is another validation of the value of our technology, intellectual property and, most importantly, our people. The infusion of cash from our recent transactions with II-VI are critical catalysts to further our restructuring and turnaround plans," he adds.
"We are pleased to add a broad portfolio of world-class, fully customized solutions to provide customers with end-to-end design and manufacturing support to enable the rapid realization of customer-specific amplification and micro-optics solutions," says II-VI Inc's president & CEO Francis J. Kramer. "We will leverage the telecom laser pump product line we recently purchased from Oclaro, and the business will benefit from the complementary product portfolio and capabilities of our [near-infrared] Photop business unit," he adds. "The business and its team come to us as a recognized industry leader, and are well positioned with a broad technology and product portfolio which is underpinned by over 400 patents."
II-VI will finance the acquisition with available cash from its recently expanded credit facility. Assuming that the transaction receives regulatory approvals on or about 1 November, for the remainder of II-VI's fiscal year (to end-June 2014) the business is currently expected to generate $60-65m in revenue and to be neutral to earnings after the impact of one-time transactions expenses is included. II-VI expects the acquisition to become accretive to earnings during the fiscal year ending 30 June 2015.
