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To: Dealer who wrote (30854)	8/28/2000 6:38:30 PM
From: Dealer	Read Replies (1) \| Respond to of 35685

JDSU--JDS Expects Approval for Sdl Merger By: Olaf de Senerpont Domis 8/26/00 Source: The Daily Deal Despite new scrutiny from antitrust regulators, the largest technology merger - JDS Uniphase Corp.'s $41 billion acquisition of SDL Inc. - will close on schedule, a senior JDS official predicted Friday. The U.S. Department of Justice late Thursday made a widely expected request for additional information regarding the pending union of the two optical component makers. In an interview Friday, SDL Chief Financial Officer Michael Foster said the acquisition, announced July 10, is moving along "on the same time frame as before," adding that he expects the deal to close by the end of the year as originally planned. "Everybody thought that a second request was highly likely," Foster said. "Both JDS and SDL compete in some of the same market segments." While he declined to detail what information the Justice Department requested of the companies, Foster acknowledged that so-called 980-nanometer pump lasers are one area of product overlap. Both JDS and SDL are significant suppliers of the lasers, which are key components in amplifiers used to boost light signals traveling over optical networks. Jim Liang, an analyst with WR Hambrecht & Co. in San Francisco, predicted that if regulators required any pump laser divestitures, they would come from the JDS side. "One of the most important reasons why JDS acquired SDL was its market-leading technology in the pump laser market," Liang said. "For them, to divest SDL's operations in this area would basically make the deal meaningless." Investors in the merging companies did not appear especially concerned Friday. Shares of JDS climbed 0.2% to close at $125.31; SDL shares closed at $402.12, a decrease of 2.3%. Second requests, which are made under the Hart-Scott-Rodino Antitrust Improvements Act, are relatively rare, though they occur more frequently in larger deals. In 1999, federal antitrust regulators made 111 second requests, which represent 2.6% of all transactions subject to the HSR rules. But only a few of those mergers were challenged. "The traditional number is 25% of mergers that get second requests get challenged, which basically means regulators say, 'You have to do this to get us to approve the merger,' or 'Sorry, this deal is blocked,'" said Bob Lande, a senior research fellow at the American Antitrust Institute in Washington, D.C. In a press release, JDS said it and SDL "intend to respond promptly and fully to the government's request, which are not unusual in a merger of this size that involves new, rapidly changing and important technologies." JDS, which has rapidly become a major consolidator in the optical networking hardware realm, has shown that it is willing to work with regulators to garner approval on a deal. In its $20.4 billion acquisition of optical component maker E-Tek Dynamics, JDS and its target were required by the Justice Department to sell their rights to purchase light filter components from several suppliers. That transaction closed 10 days before JDS announced its bid for SDL. "If this company has a mentality to work with the government, as opposed to a Microsoft mentality of fighting all the way, then a challenge can often be worked out without too much hassle," Lande said. The JDS-SDL deal awaits the approval of the shareholders of both companies and U.S. and Canadian regulators. Olaf de Senerpont Domis is a senior reporter at The Daily Deal. He can be reached at: (650) 508-1667 or mailto:olafd@home.com