UPDATE 2-JDS spree continues with $750-million
buy
(Updates with further details from conference call, adds byline, analyst comments, stock
price.)
By Susan Taylor
OTTAWA, April 4 (Reuters) - Fiber-optic component giant JDS Uniphase Corp. continued
its shopping spree on Tuesday, spending $750 million in stock to buy U.S.-based Cronos Integrated Microsystems Inc.,
undaunted by an antitrust review of its most recent $16.7 billion purchase of competitor E-Tek Dynamics Inc.
JDS Uniphase (NasdaqNM:JDSU - news) (Toronto:JDU.TO - news), the world's biggest supplier of parts for fiber-optic
equipment in phone networks, said Cronos gives it a key piece of technology in the push toward all-optical networks.
``This is one of the most important single decisions we've made in the company's history,' said chief executive Kevin
Kalkhoven in a conference call on Tuesday. ``I believe that the technology is going to be profound in its importance.'
Several analysts agreed, saying the deal is significant because it adds to JDS Uniphase an optical pioneer and powerhouse in its
sector.
``This is the most important acquisition JDS has ever made,' said Duncan Stewart, fund manager at Tera Capital Corp. ``This
acquisition could potentially -- not now, but one day -- sell more than the rest of JDS Uniphase. It probably won't, but it
could.'
Shares in JDS Uniphase rose to C$166.75 in morning trading on the Toronto Stock Exchange before slipping to C$158.10, a
drop of C$2.95. On Nasdaq, the stock surged to 115 before pulling back to 108-7/8, a drop of 2-3/4.
Based near Ottawa, JDS is the product of a June 1999 merger between Uniphase Corp. and JDS Fitel. It sells fiber-optic
components that boost the capacity and speed of optical networks.
The number of JDS shares used for the transaction, which is expected to close at the end of April, will be based on JDS's
stock price preceding the deal's closing. The acquisition will cut earnings over two quarters by less than 1 cent a share.
The deal is subject to certain conditions, including Cronos stockholder approval, but regulatory approval is not required.
Cronos shareholders representing a majority of the firm's outstanding voting stock have agreed to vote in favor of the deal, JDS
said.
The transaction will not affect a U.S. antitrust review of JDS's merger with competitor E-Tek (NasdaqNM:ETEK - news),
JDS said during the conference call.
``It is not unusual for transactions of this size to get a second request (for information),' chief financial officer Tony Muller said.
``We're not surprised the (U.S.) government has asked for more information.'
U.S. antitrust officials requested further documents and information on that deal late on Friday.
``It's hard to say what the government's going to do given what's happened with Microsoft, but I think that they (JDS) have a
defensible case regarding E-Tek,' said Patrick Houghton, an analyst at Sutro & Co.
The Cronos deal will have no impact on E-Tek, he added. ``Cronos is completely new technology and I think it's incumbent
upon JDS Uniphase to try and find these new technologies.'
Based in Research Triangle Park, North Carolina, Cronos has developed and manufactures micro-electro-mechanical
(MEMS) devices. The company, with 52 patents and pending patents, has 67 staff and annual sales of about $10 million.
That technology is based on tiny silicon structures that can be controlled to switch, add, direct and control light as it travels on
fiber-optic networks.
The equipment is used for small, high-capacity optical switches and is expected to play a critical role in next-generation
``mega-switches', Kalkhoven said.
The large-scale switches will be integral to expand fiber-optic networks, JDS said, because they allow optical signals to travel
over networks without the time-consuming and expensive regeneration to electronic signals.
Cronos's equipment is smaller, uses less power and costs less to produce than traditional electronic and electromechanical
components, JDS said.
Optical networks, which transmit signals as pulses of light rather than electronically, send more data faster than conventional
networks, JDS said. There is a growing burden on those networks as increasing amounts of voice, data and video traffic are
pumped along network pipes.
($1=$1.45 Canadian) |
