JDS FITEL Inc. and Uniphase Corporation Agree to US $6.1 Billion Merger
NEPEAN, Ontario & SAN JOSE, California, Jan. 28 /CNW/ - JDS FITEL Inc.
(TSE:JDS) and Uniphase Corporation (NASDAQ: UNPH), announced today the signing
of a definitive merger agreement to combine the companies in a merger of
equals. The transaction is valued at US $6.1 billion based on January 27, 1999
closing prices.
The merged company, to be named JDS Uniphase Corporation, will be one of
the largest and most advanced optical component and module manufacturers in
the world with global operations in eight countries serving all major
fiberoptic communications markets. By joining forces, JDS FITEL and Uniphase
will offer customers increased access to all the key active and passive
components and modules used to transmit, route and manage optical signals in
fiberoptic networks.
Uniphase, a leading manufacturer of active fiberoptic components and
modules, including lasers, modulators and transmitters, will complement JDS
FITEL's wide portfolio of passive fiberoptic products such as wavelength
division multiplexers (WDM), optical switches and isolators. By combining the
two companies' complementary portfolios, JDS Uniphase will offer a broader
range of solutions integrating both active and passive components to meet the
increasing demand for products with a higher level of functionality.
With similar markets and minimum product overlap, the combined company
will focus on its complementary strengths while supporting the continued
growth and development of its operations and workforce. In particular, JDS
Uniphase will concentrate on its state-of-the-art manufacturing, advanced
research and world-leading product development to address key applications in
the major fiberoptic communications markets including submarine, long-haul,
metropolitan and cable TV markets.
Under the terms of the agreement, JDS FITEL shareholders resident in
Canada will, pursuant to a plan of arrangement, be entitled to receive 0.50855
shares of exchangeable stock of JDS Uniphase Canada, a wholly owned subsidiary
of JDS Uniphase, or, at their option, 0.50855 shares of JDS Uniphase, for each
JDS FITEL share they hold. The exchangeable shares are the economic and voting
equivalent of shares of common stock of JDS Uniphase and will be exchangeable
for such shares on a one-for-one basis at any time. The current shareholders
of JDS FITEL and Uniphase will each own approximately 50 percent of the
combined company following the merger. The structure of the transaction is
expected to provide the opportunity for a tax-free exchange for Canadian
holders of JDS FITEL stock.
The merger is conditional upon regulatory approvals, as well as approvals
by Uniphase and JDS FITEL shareholders. The transaction will be accounted for
as a purchase and the resulting goodwill will be amortized over a period of
approximately 5 years.
JDS Uniphase Corporation will be quoted on the Nasdaq National Market and
will report its financial results in U.S. dollars. On a pro forma basis, the
new company would have reported annual sales of approximately US $420 million
based on 12 month trailing sales and would employ more than 3,600 people
worldwide.
JDS Uniphase will be led by an integrated executive team from both
companies. Kevin Kalkhoven from Uniphase will be Co-chairman and Chief
Executive Officer. Jozef Straus from JDS FITEL will become Co-chairman,
President and Chief Operating Officer. Both companies will each nominate one
half of the board.
Jozef Straus, President & CEO of JDS FITEL, stated, ''I am very excited
about the excellent strategic fit this merger provides as well as the
potential product opportunities it allows us to create. The transaction
reflects our continuing effort to capitalize on the rapidly growing
telecommunications industry by providing a broader product range, higher
levels of functionality and increased technological differentiation. As
fiberoptic networks continue to increase transmission capacity, we will be
better positioned to offer customers a more comprehensive product offering
with shorter development and deployment cycles.''
Kevin Kalkhoven, Chairman & CEO of Uniphase stated, ''This merger brings
together two market leaders at the forefront of the fiberoptics industry to
offer a compelling vision for the future of fiberoptic communications. By
combining two companies with complementary products and technologies, we can
focus on meeting the needs of our customers through combined R&D and increased
product integration in an effort to unleash greater innovation and reduce
time-to-market.''
Mr. Junnosuke Furukawa, President of The Furukawa Electric Co., Ltd.
stated: ''The fiberoptic industry is evolving rapidly and we recognize that,
by merging together, JDS FITEL and Uniphase will be a stronger enabling force
in that evolution. We are very pleased to be part of making this transaction
possible, as we will be the largest shareholder in the company. Furukawa
looks forward to a long-term relationship with JDS Uniphase.''
Furukawa, JDS FITEL's largest shareholder with 40.5 million shares, or
approximately 52% of the outstanding shares, endorses the merger. In order to
effect a limited return on its significant ongoing investment, Furukawa
intends to sell approximately 3.5 million of its shares of JDS FITEL in the
near term. Furukawa has engaged CIBC Wood Gundy Securities Inc. as a financial
advisor regarding the proposed sale.
CIBC Wood Gundy Securities Inc. has provided JDS FITEL's Board of
Directors an opinion that the transaction is fair from a financial point of
view to JDS FITEL's common shareholders.
BT Alex. Brown Incorporated has provided Uniphase's Board of Directors an
opinion that the consideration to be provided by Uniphase in the transaction
is fair from a financial point of view to holders of Uniphase's common stock.
Uniphase Corporation is an optoelectronics company that designs,
develops, manufactures and markets fiberoptic telecommunications components
and modules, and laser subsystems. The company's telecommunication products
include semiconductor lasers, high-speed external modulators, transmitters,
fiber Bragg gratings and optical modules for fiberoptic networks in the
telecommunications and cable television industries. Uniphase's shares are
quoted on Nasdaq National Market under the symbol UNPH. More information on
Uniphase is available at www.uniphase.com.
JDS FITEL is a Canadian high technology company that manufactures and
distributes a broad range of products for the growing fiberoptic
communications market. The Company executes its business strategy through its
advanced design capabilities, proprietary manufacturing tools and processes
and, in particular, its early participation in advancing market and technology
trends. JDS FITEL's common shares are listed on The Toronto Stock Exchange
under the symbol JDS. More information on JDS FITEL is available at
www.jdsfitel.com.
The statements contained in this press release that are not purely
historical are forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities Act of 1934.
These statements may be identified by their use of forward-looking terminology
such as ''believes,'' ''expects,'' ''may,'' ''should,'' ''would,'' ''will,''
''intends,'' ''plans,'' ''estimates,'' ''anticipates'' and similar words. Such
forward-looking statements include, but are not limited to, statements
regarding the expectations, intentions or strategies of Uniphase or JDS FITEL
and possible benefits to Uniphase or JDS FITEL as a result of the proposed
transaction described above. Such forward-looking statements involve risks
and uncertainties that could cause actual results to differ materially from
those projected. Risks and uncertainties that could cause actual results to
differ materially from such forward-looking statements, include, but are not
limited to impact on operating results of purchase accounting treatment, the
speed of integration of the two businesses, variability and uncertainty of
quarterly operating results, difficulty in manufacturing Uniphase's and JDS
FITEL's products, transaction risks, customer concentration, impact of
continued industry competitive pressures, success of strategic initiatives,
continued industry consolidation, conflicting patents and intellectual
property rights of third parties and other factors discussed from time to time
in reports filed by Uniphase with the Securities and Exchange Commission. The
forward-looking statements contained in this news release are made as of this
date hereof and Uniphase assumes no obligation to update the forward-looking
statements, or to update the reasons why actual results could differ
materially from those projected in the forward-looking statements.
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