26 January 2004 Sunnyvale, CA Lightwave--Finisar Corporation and Honeywell International Inc. announced today that they have entered into a definitive agreement in which Finisar has agreed to acquire Honeywell's VCSEL Optical Products business, based in Richardson, Texas, for approximately $75 million in cash. The transaction is subject to applicable regulatory approvals and other customary closing conditions and is expected to close in the first calendar quarter of 2004. Following the completion of the acquisition, Finisar expects to continue to operate the business at the Richardson, Texas facility.
Honeywell's VCSEL Optical Products business manufactures vertical cavity surface emitting lasers (VCSELs), primarily used in high speed fiber-optic data communications and position sensing applications. VCSELs are cost-effective optical components that deliver coherent light with high efficiency and can be modulated at high speeds. Finisar provides fiber-optic subsystems and network performance test systems that enable high-speed data communications for networking and storage applications.
"The VCSEL Optical Products business is a proven technology leader with excellent long-term potential and strong product position," said Roger Fradin, president of the Automation and Control Solutions (ACS) division of Honeywell. "This business has been considered non-core to Honeywell ACS's strategic focus of developing its sensing and control, fire and security, process solutions and building solutions businesses. Selling the unit represents a strategic win for the VCSEL business, Finisar, Honeywell, our joint customers and employees."
"We plan to continue the operation of this business as a worldwide supplier of VCSELs," said Jerry Rawls, Finisar's president and chief executive. "This group has developed a reputation as an excellent supplier to the industry and we expect to continue that tradition. In addition, VCSELs are probably the single most important component in a short wavelength transceiver in terms of performance, reliability and cost. With short wavelength transceivers comprising a significant portion of our total unit volume, this acquisition will also help us to realize additional cost savings."
The VCSEL Optical Products business generated approximately $36 million in revenues during 2003, including approximately $9 million from components supplied to Finisar. Finisar expects the business to contribute approximately $25-$30 million in revenues during the first year of operation with a positive impact on gross margins and pretax earnings, excluding the impact of non-cash charges related to the acquisition.
Honeywell VCSEL Optical Products and Finisar have had a long-standing relationship dating back to 1996 when Honeywell introduced the first VCSEL component specifically targeted for fiber-optic data communications. Finisar was one of the first customers to adopt this new technology which helped to enable the development of high-speed, highly reliable and cost-effective gigabit fiber-optic transceivers for links spanning less than 300 meters. These products are typically used in LAN and storage area network (SAN) applications.