Europe?s optical networkers in focus
By Gareth Vaughan , FTMarketWatch
Last Update: 8:29 AM ET Jul 10, 2000
LONDON (FTMW) - European optical networking companies such as Bookham Technology and Highwave Optical were under the spotlight on Monday after industry giant JDS Uniphase said it was buying SDL in a $41 billion deal.
SDL (SDLI) makes laser equipment that lets customers send multiple light signals over a single fiber. JDS (JDSU) is one of its biggest customers.
Under the terms of the deal, SDL shareholders will get 3.8 JDS shares for each SDL share, or about $441.51. That represents a premium of almost 50 percent over SDL?s Friday closing price. See full story.
?Anything that?s optical right now is really hot,? said Olivier Vallee, Paris-based optical networking analyst at Close Brothers.
He said the price JDS is paying is about 100 times SDL sales, while shares in Germany?s ADVA Optical Networking (DE:510300) trade at about 55 times its sales.
?Optical networking represents the single biggest challenge for telecoms service providers over the next few years. Everyone?s trying to get into it,? Vallee said.
Europe?s players
European optical networking companies include the U.K.?s Bookham Technology (UK:BHM) and IQE (UK:IQE) , France?s Highwave Optical (FR:416100) and ADVA.
Following the massive JDS-SDL deal, shares in most of the European players have gained. Bookham advanced 4.9 percent to 4,425 pence in London although IQE shares were flat at 5,200 pence. Over in Paris Highwave leapt 18.12 percent to 89 euros and ADVA surged 5 percent to 709 euros in Frankfurt.
Close Brothers? Vallee said of Europe?s publicly listed optical networking companies, he doesn?t see any acquisition targets, but that start ups with products, such as Highwave which listed in Paris last month, might emerge and become takeover targets for the big players.
?The number of acquisition targets is running out,? he added.
Of the listed batch Vallee said Bookham and IQE in particular, are in great positions because they make Dense Wave Division Multiplexing (DWDN) lasers on silicon. ?Bookham?s advantage is it?s the only company I know that does it on silicon,? he said.
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