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To: RR who wrote (23983)	12/11/2000 6:24:17 PM
From: Sully-	Read Replies (1) \| Respond to of 65232

Decision on JDS purchase of SDL seen near, analysts Monday December 11, 5:18 pm Eastern Time (UPDATE: All figures in U.S. dollars.) By Susan Taylor OTTAWA, Dec 11 (Reuters) - U.S. antitrust authorities are expected to give the green light soon to JDS Uniphase Corp.'s (Toronto:JDU.TO - news) (NasdaqNM:JDSU - news) $25.4-billion acquisition of SDL Inc. (NasdaqNM:SDLI - news), but approval is expected to come with conditions, analysts said on Monday. The deal will create a powerhouse maker of fiber-optic components for the telecoms industry, marrying JDS Uniphase, the No. 1 supplier, with No. 2 SDL. Optical components, which help cram more information onto fiber-optic telecoms networks are in huge demand as phone carriers and Internet service providers face ever-increasing volumes of voice, data, and video traffic along their networks. ``You just have to look at the arbitrage movement from the beginning of November,'' said UBS Warburg analyst Joseph Wolf. ``That's the market telling you that it's certain it's going to go through.'' The spread between the value of JDS and SLI stock has narrowed from close to 20 percent last month to about 4-5 percent as the market becomes more confident the deal will go through, he said. ``I think the question is how strong of a concession will be requested (by U.S. antitrust authorities) as opposed to is it going to go through or not go through,'' said Tim Anderson, an analyst at Salomon Smith Barney. ``Our sense is as long as the requested concessions are not ridiculous, or would not make strategic sense for JDS Uniphase, both companies will do everything in their power to put the merger to rest.'' It is widely forecast that approval will hinge on a way to reduce an overlap for 980-nanometer pump lasers. Those products boost the speed of optical signals as they travel along a fiber-optic network. In combination with SDL, JDS will control between 70 percent and 80 percent of the market for those lasers in land-based networks and 90 percent for underwater networks, said Wolf said in a recent report. Many analysts believe that the most likely solution lies with JDS Uniphase selling its Zurich, Switzerland, manufacturing plant for the lasers. ``As we've been saying -- and we also think it's a fairly widely held belief -- that JDS Uniphase is likely to have to divest its Zurich facility...to help facilitate the closure of the acquisition,'' said Anderson. ``Overall SDL has a higher-powered product and has a better product than what JDS Uniphase currently manufactures.'' Such a sale could attract such production-hungry component producers such as Nortel Networks Corp. (NYSE:NT - news) (Toronto:NT.TO - news), Lucent Technologies Inc. (NYSE:LU - news), Corning Inc. (NYSE:GLW - news), and Furukawa Electric Co. Ltd. , Wolf wrote. The analyst estimates the JDS Uniphase plant's revenues at $275 million for calendar 2001 and its selling price between $4 billion and $7 billion. That is a ``bargain'' compared to about $4 billion which Corning spent to purchase the Pirelli components business, projected to have 2001 sales of $80 million, Wolf wrote. Final approval of the acquisition will rest with shareholders, who vote on the deal on December 27. The SDL acquisition is not expected to slow the pace of rapid expansion that has become JDS Uniphase's hallmark, analysts said. JDS Uniphase shareholders will vote on a plan to double its pool of authorized common shares to 6 billion at the company's annual general meeting on Wednesday in San Jose, California. The company said in a proxy statement that it could use the stock to acquire other companies, purchase property, stock splits, or other purposes. ``I expect JDS to continue to grow through strategic acquisition,'' said Wolf. ``They may be smaller (deals), but I don't think the company is going to change its growth strategy.'' Formed by the $6.1 billion merger of California's Uniphase Corp. and Canada's JDS FITEL in June 1999, JDS Uniphase has rapidly expanded through a string of purchases. Its largest deal until now was a $17.4 billion stock purchase of E-Tek Dynamics Inc. in January 2000. ($1 equals $1.53 Canadian) biz.yahoo.com Ö¿Ö