Corning and Alcatel Optronics sell photonic/optronic technologies to Avanex
13 May 2003 Paris and Corning, NY Lightwave Europe -- Corning Inc. today announced that it has agreed to sell a significant portion of its photonic technologies business to Avanex Corp. in exchange for common stock currently valued at approximately $25 million. In a related announcement, Alcatel has entered into a binding agreement to divest its optical components business to Avanex in a stock-for-stock transaction.
13 May 2003 Paris and Corning, NY Lightwave and Lightwave Europe -- Corning Inc. today announced that it has agreed to sell a significant portion of its photonic technologies business to Avanex Corp. in exchange for common stock currently valued at approximately $25 million. In a related announcement, Alcatel has entered into a binding agreement to divest its optical components business to Avanex in a stock-for- stock transaction.
Avanex will combine its existing business with the two acquisitions to strengthen its position as a provider of optical components, modules and subsystems for fiber-optic transmission networks. Corning will own 17% of Avanex's common stock after both transactions are completed, and Alcatel will hold 28% of the combined entity.
After the acquisitions, Avanex will offer products that address optical wavelength generation and modulation, multiplexing and demultiplexing, signal amplification, wavelength routing, and dispersion compensation. Avanex estimates that after the acquisitions, it will have over USD250 million in cash and 1,600 employees on the closing date.
"Our acquisition of these two complementary businesses is a logical, timely and appropriate step for success in today's market environment," notes Walter Alessandrini, chairman, president, and chief executive officer of Avanex. "After the acquisitions of Alcatel's optical components division and certain optical component business lines from Corning, Avanex will have the scale and resources to effectively supply our customers with their product needs."
"The optical components industry has been forced to consolidate because of the extended downturn in the telecommunications industry. Following the Corning and Alcatel Optronics acquisitions, Avanex will have the products, technologies, people and financial resources to capture new market opportunities as they arise," adds Wendell Weeks, Corning's president and chief operating officer. Corning is committed to its remaining telecommunications businesses, says Weeks, and continues to invest in extending its market-leading optical fiber, cable and hardware and equipment businesses.
According to Corning, Avanex will acquire assets relating to the company's optical amplifier facility in Erwin, NY, and its optical components plant in Milan, Italy. Corning expects Avanex to acquire approximately 400 employees in this transaction. Corning representatives say the company also plans to close its Corning Lasertron facility in Bedford, MA by the end of this year, eliminating approximately 150 positions. Lasertron manufactures photonic components including pump lasers.
The Alcatel acquisition will include key operations based in Nozay, France and Livingston, UK. Avanex and Alcatel have also entered into a supply agreement wherein Avanex will provide solutions for Alcatel's optical networking products over a three-year period.
"With this agreement, we are contributing Alcatel Optronics' outstanding technical expertise to an enlarged and credible partner that will support our optical networking activities, which are key to Alcatel," contends Christian Reinaudo, executive vice president of Alcatel.
• Alcatel and Corning will receive as consideration 28% and 17% respectively of Avanex's outstanding common stock of the post-transaction company, which currently translates into approximately 35.2 and 21.4 million shares. Following the transaction, Alcatel and Corning have agreed to certain restrictions on the voting and transfer of their Avanex shares.
• Avanex will acquire all outstanding equity of Alcatel's optical components division. This business will include key operations located in France and the United Kingdom.
• Alcatel is expected to contribute over $110 million in cash, to be finalized at closing.
• Avanex and Alcatel will enter into a supply agreement whereby Avanex will supply solutions for Alcatel's optical networking products over a three-year period.
• Assets to be purchased from Corning include optical amplifier, dispersion compensation, and micro optics operations located in New York and Corning modulator operations located in Italy.
• Corning is expected to contribute over USD20 million in cash, to be finalized at closing.
• Alcatel and Corning will assign approximately 1,400 patents to Avanex and additionally license several thousand patents to Avanex as part of the transaction.
• At closing, Dr. Joseph A. Miller Jr., senior vice president and chief technology officer of Corning, is expected to join the Avanex Board of Directors.
Alcatel's optical component division had sales of EUR 7.3 million for its March 2003 quarter. The division's products include lasers, photodetectors, optical amplifiers, transponders and key passive devices such as arrayed waveguide gratings and Fiber Bragg grating filters. Alcatel's optical component division had 950 employees as of 31 March 2003.
The business lines to be acquired from Corning had sales of approximately USD11 million for the March 2003 quarter. Key products from these business lines include optical amplifiers, dispersion compensation modules, lithium niobate and electro-absorptive modulators, and micro optics products. These business lines had 490 employees as of 31 March 2003.
The companies anticipate closing the transaction by the end of Avanex's first fiscal quarter, ending September 30, 2003, subject to customary closing conditions, including the approval of the stockholders of Avanex and required regulatory approvals.