LOts of M&A activity in optics....here is what they are saying about GLWs most recent deal......
Corning, Oak sign $1.8B pact -- Merger aimed at gaining dominance of fiber-optics market
Claire Serant
Corning Inc.'s upcoming $1.8 billion marriage to Oak Industries Inc. is being viewed by industry analysts as a "win-win" deal for both companies, which want to dominate the ever-growing fiber-optic components market.
Last week, Corning's chairman and chief executive, Roger G. Ackerman, and Oak's chairman and chief executive, William S. Antle III, inked an agreement designed to secure Corning's place as a global leader in optical communications. The pact was unanimously approved by the board of directors of both companies.
Under the agreement, Corning, a New York-based operation, will exchange 0.83 shares of its common stock for each share of Oak, a Waltham, Mass., company. The transaction is expected to take place in the first quarter of 2000 pending regulatory and Oak shareholder approval, said Corning spokesman Paul Rogoski.
"It's a fine deal. It merges two successful companies," said Wayne Johnson, an analyst at H.G. Wellington & Co. Inc. in New York. For the first nine months of this year, Oak reported revenue of $323.2 million. Corning earned more than $3 billion in the same time period.
By purchasing Oak's active-optic products such as Lasertron, widely considered a market leader in pump lasers, and Gilbert Engineering Co., a key manufacturer of coaxial connectors for cable networks, Corning is clearly diversifying its mainly passive-optic product line by acquiring the 47-year old Massachusetts company.
"The addition of Oak Industries demonstrates the strength of our commitment to being the world's leading supplier to system houses in all areas of optical communications, including amplifiers, optical components, modules, fiber, cable, and hardware," said Corning's Ackerman.
"Our customers will have a single source for components and modules for optical communications, as well as access to a broad array of related products, including optical fiber, cable, and hardware-a combination that only Corning can offer," he added.
Charles Willhoit, an analyst at J.P. Morgan & Co. Inc., agreed.
"The key to win business is to be more diversified," Willhoit said. "They [the marketplace] want to buy more components from fewer players. Instead of going to 15 vendors they want to go to three or four."
HLIT/DIVI will have a unique sort of integration, but different than the inegration that others are going for......
So far, the merger, which was anticipated by most industry analysts, has not created a new company name. Also, there are no plans to change Oak's product line, including the Frequency Control Group, which designs and manufactures frequency-control devices used in wireless, wireline, and fiber-optic applications, Corning officials stressed.
Oak's Control Group includes Harper-Wyman, the leading manufacturer of control switches for gas ranges, and Oak Grisby Inc., which manufactures switches and encoders that are used in several products.
"It was a matter of time. It's a strategic benefit to have both active and passive components. Corning will be open to other deals to expand its product line and services," said Lissa Bogaty, an analyst with Salomon Smith Barney Inc., New York.>
Lasertron more than doubled its sales of DFB source lasers this year compared with 1998 sales. The Oak division's joint venture with Wuhan Telecommunication Devices Co. in China is expected to earn significant profits.
Perhaps CUBE/DIVI strength in CHina will give HLIT some help there?
"We're delighted with the prospect of merging with Corning. We believe that Oak's employees, shareholders, and customers will all benefit from the combination of the two companies," Oak's Antle said.
Go HLIT/DIVI lets see some unique and compelling systems maybe you guys have been working on some new stuff for months already?
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