Comments on merger:
JDS Uniphase Corp. (JDSU) 191 7/16 closed: This fiber optics company loves the spotlight, and it finds itself back in it again this morning with its announcement that it has signed a definitive merger agreement with Optical Coating Laboratory (OCLI), a leading manufacturer of optical thin film coatings and components whose technology has become increasingly important as the demand for bandwidth has driven system manufacturers to increase the number of wavelengths in their wavelength division multiplexing systems. The agreement calls for the exchange of 0.928 shares of JDSU common for each outstanding share of OCLI. The deal is valued at approximately $2.8 bln, and represents nearly a 50% premium for OCLI shareholders based on JDSU's closing price yesterday. Having operated a joint venture since 1997, OCLI will operate as a wholly-owned subsidiary of JDSU when the transaction is completed. Early estimates are that the deal will be consummated in the first calendar quarter of 2000, subject to government and shareholder approval. According to JDSU management, the integration of OCLI will enable JDSU to increase its manufacturing capacity, shorten product development cycles, and bring advanced new products to market more quickly which is certainly important in the ever-changing world of technology. The deal is also bound to enhance JDSU's earnings prospects as OCLI is expected to earn $2.00 per share in FY00. In its last fiscal year, OCLI had total revenues of $255.6 mln, and through its first three quarters this year, had total revenues of $243.7 mln. Shares of JDSU are indicated about 4 1/2 points lower at the moment, but that seems to be a small price to pay for shareholders who have seen this stock appreciate 452% since the start of the year on a split-adjusted basis. That kind of appreciation has enabled JDSU to use its stock as currency as it seeks to expand its business-- and it is doing just that as OCLI is the third company JDSU has acquired in the past month. |
