Bookham buys US group New Focus in diversification drive
By John Walko, CommsDesign.com
Sep 22, 2003 (4:03 AM)
URL: commsdesign.com
LONDON — Bookham Technology is buying, for £117.6 million ($190.5 million) photonics and microwave component specialist New Focus (San Jose, California) in what the Oxfordshire, UK company says continues its strategy to increase its presence in non-telecoms businesses.
The all-share deal will be a significant diversification for Bookham, which focuses on optoelectronic devices, and brings with it about 200 people, mainly in San Jose, as well as a manufacturing facility in Shenzhen, China.
The acquisition will also help Bookham's increasingly tight cash-flow situation, as New Focus should bring in about £65 million ($105 million) in cash after distributing approximately £86 million ($140 million) to shareholders as part of the deal.
New Focus specialises in the development and manufacture of tunable lasers, microwave RF amplifiers, optoelectronics, photonics subsystems and photonic tools and has customers in the mainstream semiconductor, defense, research, industrial, biotech/medical and telecom test and measurement industries.
Bookham was created to supply optoelectronic devices for the optical communications business, and despite the slump in this sector over the past two years, has bought much of both Nortel's and Marconi's optoelectronics and microwave RF foundry operations. Despite this diversification, the vast majority of Bookham's sales still go to the telecoms sector.
Conversely New Focus' revenues are predominantly generated from non-telecom markets, including semiconductor capital equipment and defense.
On a pro forma basis, as if the two businesses had been combined for the first six months of 2003, Bookham's non-telecom revenue contribution would increase from 6% to 20%. Similarly, Nortel's and Marconi's contribution to Bookham's gross revenues would change from 60% to 51% and from 13% to 11%, respectively.
New Focus had a market capitalisation of approximately £163 million ($265 million) on September 19, 2003 and had sales of £7.8 million ($12.4 million) and a net loss of £7.7 million ($12.3 million) for the six months ended June 29, 2003, each calculated in accordance with US GAAP. The net loss included £1.4 million ($2.1 million) in restructuring charges.
Bookham also says New Focus's manufacturing facility located in Shenzhen, China, will lower the combined group's manufacturing costs. The acquisition, which is still subject to shareholders' approval, will also provide an opportunity to expand Bookham's presence in Silicon Valley.
Giorgio Anania, President and Chief Executive Officer of Bookham, commented: “Operationally, we believe Bookham's and New Focus's strengths are complementary and should enable the combined company to continue to reduce manufacturing costs and hence further reduce our breakeven point. Bookham's leading-edge manufacturing capability in our Paignton, Caswell, Zurich and Santa Rosa facilities will also be able to supply key infeeds into New Focus's products."
Nicola Pignati, Chairman, President and Chief Executive Officer of New Focus added: “This transaction allows our stockholders to receive a balanced return in the form of a cash distribution and a significant equity ownership position in Bookham. The Bookham management team has done an outstanding job in restructuring and repositioning the company for future success.
"Our cash and manufacturing facilities in the Silicon Valley and China will add strong support to Bookham's strategic plans. Additionally, our skills and knowledge in the application of photonics to non-telecom markets, combined with Bookham's component technologies, should enhance the combined company's ability to serve these markets.” |
