Two recent acquisitions indicate that SDL is continuing to position itself as an independent supplier of active and optoelectronic components. Last week SDL announced the acquisition of Queensgate Instruments Ltd. (Bracknell, England), about 10 days after announcing a definitive agreement to acquire Veritech Microwave (South Plainfield, NJ). Queensgate is a privately held manufacturer of optical network monitoring modules for long-haul terrestrial fiberoptic transmission systems, and Veritech is a privately held manufacturer of high-speed optoelectronic modules for long-haul undersea and terrestrial fiberoptic transmission systems.
The Queensgate agreement calls for payments from SDL of up to $210 million consisting of initial payments of $3 million cash and $57 million in SDL stock, as well as contingent payments of up to $150 million based on Queensgate's pretax profits in 2000 and 2001. Queensgate will continue to operate as a wholly owned subsidiary of SDL. In calendar-year 1999, Queensgate reported revenues of approximately $9 million and has about 110 employees. Ken Reay, CEO and cofounder of Queensgate, will continue with SDL as the managing director of the SDL subsidiary and will report to Greg Dougherty, chief operating officer of SDL.
Optical network monitoring, also a primary factor in the Veritech acquisition, is expected to be a rapid growth market in the future as fiberoptic networks move toward higher channel counts, dynamic adding and dropping of wavelength channels, and, ultimately, all optical networks. According to the Veritech agreement, SDL will issue 1.5 million shares of stock, valued at $590 million at the time of the announcement, in exchange for all of the stock of Veritech, which will continue to operate as a wholly owned subsidiary.
