Mellanox to buy silicon photonics developer Kotura

Mellanox Technologies, Ltd. (NASDAQ: MLNX; TASE: MLNX), which focuses on interconnect for servers and storage systems, says it has agreed to purchase silicon photonics technology developer Kotura Inc. for approximately $82 million in cash, subject to certain adjustments.

The boards of both companies have unanimously approved the deal, which is expected to close in the second half of this year.

Many developers of silicon photonics, including Intel and IBM, have targeted high-speed interconnect within data centers as the first major application for the technology (see “The promise and perils of silicon photonics”). The acquisition of Kotura would enable Mellanox to test this theory, particularly in storage area network (SAN) applications. Given that Kotura has focused on 100-Gbps technology (see “Kotura intros 100G optical engine”), including development of a 100-Gbps QSFP+ optical transceiver, Mellanox also may use its new assets to branch out into other applications. The company expects its new assets to be accretive to its full fiscal year 2014 earnings by approximately $0.01 to $0.03 per share on a non-GAAP basis.

“Operating networks at 100-Gbps rates and higher requires careful integration between all parts of the network. We believe that silicon photonics is an important component in the development of 100 Gigabit InfiniBand and Ethernet solutions, and that owning and controlling the technology will allow us to develop the best, most reliable solution for our customers,” said Eyal Waldman, president, CEO, and chairman of Mellanox Technologies. “We expect that the proposed acquisition of Kotura’s technology and the additional development team will better position us to produce 100-Gbps and faster interconnect solutions with higher-density optical connectivity at a lower cost. We welcome the great talent from Kotura and look forward to their contribution to Mellanox’s continued growth.”

Mellanox plans to establish its first U.S. R&D center at Kotura’s current location in Monterey Park, CA. The company also plans to retain Kotura’s existing product lines. Many of these products are custom developments for coherent transmission applications, as well as for data center and high-performance computing environments.

“This acquisition is important for both companies to enable interconnect innovation for data centers that require solutions that move data faster and more efficiently. Together, we can execute faster and deliver better solutions based on Kotura’s silicon photonics platform that delivers the demands of 100-Gbps interconnects and beyond,” said Jean-Louis Malinge, president and CEO of Kotura, Inc. “We are delighted to join the Mellanox team and look forward to working together to propel the combined company’s further growth.”

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