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Oclaro Strikes a Deal to Buy Opnext

Craig Matsumoto
3/26/2012

Oclaro Inc. (Nasdaq: OCLR) is acquiring Opnext Inc. (Nasdaq: OPXT), continuing the trend of gradual consolidation in the optical components industry.

The merger, announced Monday afternoon, is a stock swap of 0.42 Oclaro shares for each Opnext share. Based on Opnext's Monday closing price of $1.13, that makes the deal worth about $176 million, compared with Opnext's current market capitalization of $102 million.

Oclaro shareholders would own 58 percent of the combined company and would hold six of its 10 board seats. CEOs of both sides -- Alain Couder of Oclaro and Henry Bosco of Opnext -- would be on the board, with Couder remaining chairman and CEO of the combined company.

Opnext shares rose 64 cents (57 percent) to $1.77 in early after-hours trading, while Oclaro shares were unchanged after-hours at press time.

Why this matters
Wasn't it just weeks ago that someone was complaining about consolidation never happening in this sector?

Most people in optical networking think there's too much supply on the optical components side. It weakens the negotiating power of companies like Oclaro and Opnext, keeping margins at bare-survival levels.

Theoretically, this deal would help, boosting Oclaro's competitive stance against Finisar Corp. (Nasdaq: FNSR) and JDSU (Nasdaq: JDSU; Toronto: JDU). But Oclaro and Opnext say their product lines hardly overlap -- which would suggest the deal won't take much supply out of the industry.

To indicate a few differences between the two: At 40Gbit/s and 100Gbit/s, Opnext has focused more on client-side, short-reach transceiver modules, while Oclaro has been working on line-side modules. Oclaro also has reconfigurable optical add/drop multiplexer (ROADM) and amplifier product lines that Opnext lacks.

For more



— Craig Matsumoto, Managing Editor, Light Reading

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Pete Baldwin
Pete Baldwin
12/5/2012 | 5:38:08 PM
re: Oclaro Strikes a Deal to Buy Opnext


Dang. I knew I was gonna do that at some point!


Thanks Redface. We'll get it corrected.

redface
redface
12/5/2012 | 5:38:08 PM
re: Oclaro Strikes a Deal to Buy Opnext


"compared with Oclaro's current market capitalization of $102 million"


 


Do you actually mean "Opnext" instead of Oclaro here?  

AutoDog
AutoDog
12/5/2012 | 5:38:07 PM
re: Oclaro Strikes a Deal to Buy Opnext





Form of: 100G Ice Cane!


Shape of: 40G Long-toothed Horse!


 


It's interesting to note that the primary area of product overlap for Oclaro and Opnext are their most recent aquisitions: Mintera and StrataLight. These old farts having been going at each other for over a decade... Except now their stirring Medimucil into their OJ at the IHOP early bird special.


We'll see how the product shuffle falls out... Both have 40G and 100G LH products. My guess is that each team will keep the products in which they are ahead: Oclaro/Mintera's keeps their 40G DPSK & coherent 300MSA module but has to sh*tcan their late-to-market 100G coherent module. Opnext/StrataLight's keeps their early 100G coherent OIF module (soon with "Oclaro Inside") but flushes what little remains for their 40G DPSK product line.


Will the wonder twins join forces vanquish evil Lord Finisar or will they contine to bicker away at each other from their walkers and respective timezones?


-AD




Pete Baldwin
Pete Baldwin
12/5/2012 | 5:37:57 PM
re: Oclaro Strikes a Deal to Buy Opnext


I like the Wonder Twin reference, AutoDog.


I am proud to say I cannot name either of the Wonder Twins. My brain has stored a lot of useless, geeky, TV-related information, but thankfully, that bit got bumped out.

^Eagle^
^Eagle^
12/5/2012 | 5:37:53 PM
re: Oclaro Strikes a Deal to Buy Opnext


Hello, there was clearly an inaccuracy in the article.  AutoDog points it out as well.


Opnext does indeed have a big focus on line side metro and long haul 40G & 100G DWDM.  In fact, some could argue that the opnext side has the largest installed base of these modules considering that stratalight / opnext supplied Cisco (until Cisco bought Core), supplied the entire ATT 40 backbone upgrade, and supplied the Comcast 40G upgrade.  It could also be argued that Opnext had a larger market share of then Mintera had.


The artilcles points about client side in general are OK.   Opnext does have more client side optics.  And Oclaro does have the old Avanex product lines which have more passives, more ROADM and more EDFA products than Opnext has.  But to discount the Opnext line side high speed would be a mistake.   


sailboat

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