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Technology Stocks : JDS Uniphase (JDSU) -- Ignore unavailable to you. Want to Upgrade?

To: sam who wrote (12653)	9/15/2000 9:04:22 AM
From: sam	Read Replies (1) \| Respond to of 24042

JDS to make concessions By SIMON TUCK Globe and Mail Update — JDS Uniphase Corp. is expected to make a massive concession - perhaps even selling off a key manufacturing facility - to cement regulatory approval of its $41-billion (U.S.) acquisition of rival SDL Inc., sources say. JDS won't talk about possible remedies for any regulatory concerns, but company officials say they have no problem with the idea of concessions. Jozef Straus, the company's chief executive officer, suggested JDS would be willing to make a concession - as it did a few months earlier in the $20.3-billion acquisition of E-Tek Dynamics Inc. of San Jose, Calif. - to get the SDL deal approved. “We had to make an accommodation with E-Tek, and we did that,” he told The Globe and Mail. “So clearly if it comes to some accommodation, we just want to make sure that concerns are alleviated or met.” When asked if the company is already working with regulators to negotiate a settlement, Mr. Straus declined comment. A senior JDS official told The Globe that the company - while confident the deal will be approved by regulators - expects that a major concession will be necessary. “We wouldn't have made the deal if we hadn't thought it would go through.” Some analysts say approval of the all-stock transaction will rest on JDS's willingness to sell off its key manufacturing facility in Zurich. The facility, which could be sold for as much as $3-billion, would likely be sold to Corning Inc., another fibre-optics rival, analysts say. “There's some overlap between JDS and SDL, so that's the easiest remedy,” said one U.S. analyst who asked not to be named. “It makes a lot of sense.” The Zurich facility is believed to have annual revenue of less than $100-million, but with the booming industry's incredible valuations could be worth between $2-billion to $3-billion if the entire operation is sold. U.S. regulators, which have been reviewing the deal since it was announced, asked the two companies for more information last month. Sources say regulators are most concerned about the overlap between the two companies' pump laser equipment. Pump lasers, which are made at the Zurich facility, are designed to boost the speed of optical signals as they travel through a telecommunications network. Corning, of Corning, N.Y., was widely believed to have been the strongest of three suitors that had tried to acquire San Jose, Calif.-based SDL earlier this year before it was snapped up by JDS. The acquisition shocked most analysts when it was announced in July, further establishing JDS, based in San Jose and Nepean, Ont., as the industry's overwhelmingly dominant player. Mr. Straus said it's too early to talk about the Zurich plant, or other possible remedies. “We think we're going to be okay - but that's all I can say.” In the E-Tek deal, JDS gained regulatory approval by relinquishing some of E-Tek's contractual rights with suppliers. Analysts believe the concessions for the SDL deal will be more significant. One U.S. analyst said he believes the basic structure of a deal between the company and U.S. regulators has already been worked out. “JDS really, really wants to get this deal done.” At least one of JDS's key customers has also expressed concerns about the deal's effects on the industry. Nortel Networks Corp. boss John Roth said last month that he had told JDS he had worries about further concentration in the fibre-optics components business. JDS, meanwhile, has been talking to its customers to try to alleviate these concerns. Analysts believe the acquisition, which has not yet been approved by shareholders, will close in December. theglobeandmail.com