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JDSU, SDL Delay Merger

Light Reading
News Analysis
Light Reading

Investors will have to wait a little longer for approval from the Department of Justice regarding the megamerger between JDS Uniphase Inc. (Nasdaq: JDSU) and SDL Inc. (Nasdaq: SDLI). The two companies announced this morning that they are waiting until after the New Year to finalize their planned $25 billion marriage.

The deal, which was announced back in July, was expected to be approved in time for the companies’ special December 27th shareholder’s meeting. But this morning the companies issued a joint press release announcing the delay and postponing the meeting until after the New Year. Over the last couple of weeks, analysts grew confident that the deal would close, as the spread between the deal prices of the two companies' stocks continued to narrow (see JDSU and SDL: Getting Closer).

What’s the holdup? In the press release, the companies attribute the delay to "the time required to complete the regulatory approval process." Analysts have been fairly certain that the DOJ would approve the merger, despite the fact that a combined company would garner about 80 percent of the 980-nanometer pump laser market. This latest delay could be caused by negotiations over what to do with JDSU’s Zurich, Switzerland, plant (see Who Gets a JDSU Jewel?).

Wall Street seems to be taking the latest news well. JDSU’s stock was up 3 percent to $60 in morning trading. SDL was up 4 percent to $213.

-- Marguerite Reardon, senior editor, Light Reading, http://www.lightreading.com

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