Innovative optical and photonic products manufacturer Lumentum will acquire NeoPhotonics for $16.00 per share in cash. This represents a total equity value of approximately $918 million. The transaction has been unanimously approved by the Boards of Directors of both companies.
Headquarters in San Jose, California, NeoPhotonics operates engineering and manufacturing facilities in Silicon Valley (USA), Japan and China. Also headquartered in San Jose, California, Lumentum has its R&D, manufacturing, and sales offices located worldwide.
Lumentum’s opportunities in some of the fastest growing segments of the more than $10 billion market for optical components used in cloud and telecom network infrastructure have grown with the inclusion of NeoPhotonics.
Lumentum will give up to $50 million in term loans to NeoPhotonics as part of the deal to support projected expansion, which might necessitate greater working capital and production capacity.
The deal is scheduled to conclude in the second half of 2022, subject to shareholder approval, regulatory clearances, and other standard closing conditions.
IoT, 5G, Cloud Computing
The combined company would be better positioned to serve the needs of a global customer base that is increasingly turning to photonics to speed up the shift to digital and virtual work and life, the proliferation of IoT, 5G, and next-generation mobile networks, and the transition to advanced cloud computing architectures. Clients would benefit from the merger because they will have a stronger partner with the ability and willingness to spend heavily in innovation and production capacity.
“With NeoPhotonics, we’re making another important investment in better serving our customers and expanding our photonics capabilities at a time when photonics are at the forefront of favorable long-term market trends,” said Alan Lowe, President and CEO at Lumentum. “At the center of our strategy is a relentless focus on developing a differentiated portfolio with the most innovative products and technology in our industry so that we can help our customers compete and win in their respective markets. Adding NeoPhotonics’ differentiated products and technology and innovative R&D team is consistent with this strategy and together, we will better meet the growing need for next generation optical networking solutions.”
“We are confident this transaction will make us an even better partner to our customers, while enabling our team to deliver significant, long-term value to our stockholders,” added Mr. Lowe. “We look forward to welcoming NeoPhotonics’ talented team of employees to Lumentum.”
Photonics will become more prevalent in innovative approaches to transportation and delivery vehicles, manufacturing, industrial sensing, safety and security, health care and the life sciences, and climate change mitigation.
Because of the combined R&D innovation engine and technological basis, the merged firm would be well positioned to capitalize on new market growth prospects produced by these trends. Lumentum’s innovation engine would gain worldwide breadth and scope as a result of the merger. R&D and production capabilities will benefit the organization across Asia, North America, and Europe.
“The increasing global demand for our ultra-pure light tunable lasers and photonics technologies for speed over distance applications is more apparent than ever, and Lumentum is the ideal partner to serve our customers on a larger scale,” said Tim Jenks, President, CEO and Chairman of NeoPhotonics. “Lumentum recognizes the importance of NeoPhotonics’ differentiated photonic technology and products, which are well positioned for accelerated growth in the coming years. The combination’s complementary product portfolio, increased scale, breadth of customer application knowledge, and R&D capabilities will accelerate innovation, better serve customers, and deliver significant and immediate value to our stockholders. Importantly, this transaction is a testament to the hard work and dedication of our employees. I look forward to working with Lumentum leadership to ensure a smooth transition as we begin an exciting new chapter as one company.”