Evolving JDS Uniphase to acquire OCLI

Nov. 15, 1999
The purchase of Optical Coating Laboratory Inc. (OCLI; Santa Rosa, CA) by JDS Uniphase (JDSU; San Jose, CA) in early November represents an important step in the evolving JDSU market strategy and indicates a strong trend in the overall direction of the optical-components industry.

The purchase of Optical Coating Laboratory Inc. (OCLI; Santa Rosa, CA) by JDS Uniphase (JDSU; San Jose, CA) in early November represents an important step in the evolving JDSU market strategy and indicates a strong trend in the overall direction of the optical-components industry. During a press teleconference announcing the deal, JDSU cochairman and CEO Kevin Kalkhoven described the OCLI acquisition in the context of a "very deliberate and controlled strategy" for the evolution of JDSU. The primary objective, driven by already overwhelming and still growing customer demand in telecommunications, involves "ramping up" JDSU manufacturing by a factor of two or three by calendar-year 2001, he said. The primary asset that OCLI will add to JDSU in this respect will be the OCLI optical-filter technology for increasingly dense wavelength-division multiplexing systems.

The structure of the JDSU-OCLI deal calls for the exchange of 0.928 shares of JDSU stock for each share of OCLI common stock and will be considered as a purchase with a value of approximately $2.8 billion. It is scheduled to close in the first quarter of calendar-year 2000, pending a vote of the OCLI stockholders and federal antitrust clearance. OCLI will become a wholly owned subsidiary of JDSU, according to the deal. The strategy is to eliminate costs on the JDSU side of the merger and eliminate revenue on the OCLI side without cutting profits, thereby yielding a gross margin increase on the order of 100 basis points, according to JDSU CFO Anthony Muller. The acquisition is not expected to alter the structure of OCLI, however.—Hassaun Jones-Bey

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