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, has sold its Oclaro Switzerland GmbH subsidiary and associated laser diodes business to II-VI Inc (a provider of engineering materials and optoelectronic components) in a transaction valued at $115m. In addition, II-VI acquired an exclusive option to purchase Oclaro's optical amplifier and micro-optics business for $88m in cash.
"The sale of our gallium arsenide laser diode business is an important first step in our plan to restructure the company," says Oclaro's CEO Greg Dougherty. "The Zurich-based business, including the team and its rich legacy, is a valuable asset," he adds. "We will use the proceeds from the sale to fully repay our bridge financing and to begin restructuring the company for the future. We intend to further simplify our operating footprint, reduce our cost structure and focus our R&D investment in the optical communications market where we can leverage our core competencies."
Of the total transaction value of $115m, Oclaro has received $92m in cash. Oclaro will retain the existing accounts receivable of the business, estimated at about $15m. The remaining $8m is being held by II-VI subject to traditional post-closing conditions.
As part of the agreement, II-VI has purchased the Oclaro Zurich, Switzerland company, which includes its gallium arsenide (GaAs) fabrication facility, as well as the corresponding high-power laser diodes, vertical-cavity surface-emitting laser (VCSEL) and 980nm pump laser product lines, including intellectual property, inventory, equipment and a related R&D facility in Tucson (all of which are associated with these businesses). Revenues for the Zurich business were about $87m for the fiscal year ended 29 June 2013.
Oclaro will continue the back-end manufacturing of the 980nm pump laser and some high-power laser diode products at its manufacturing facility in Shenzhen, China, and supply them to II-VI under a manufacturing services agreement. The staff in Shenzhen will continue to be employed by Oclaro. In addition, various supply and transition service agreements have been established between the companies to ensure a smooth transition.
The option to purchase Oclaro's optical amplifier and micro-optics business, for which II-VI separately paid $5m in cash, will expire if not exercised within 30 days. If this option is exercised and II-VI purchases the amplifier and micro-optics business, the option price will be applied to the purchase price. If II-VI does not exercise this option, the $5m payment will be retained by Oclaro.
Total proceeds hence already received by Oclaro are $97m.
