Oclaro sells GaAs laser diode business to II-VI

As part of a restructuring now spearheaded by its new CEO, Oclaro, Inc. (NASDAQ: OCLR) has divested its Oclaro Switzerland GmbH subsidiary and associated laser diodes business to II-VI Incorporated (NASDAQ: IIVI). II-VI will pay $115 million for the business – and may not be satisfied with that. II-VI also has paid $5 million in cash for an option to buy Oclaro's optical amplifier and micro-optics business for $88 million in cash.

As part of a restructuring now spearheaded by its new CEO, Oclaro, Inc. (NASDAQ: OCLR) has divested its Oclaro Switzerland GmbH subsidiary and associated laser diodes business to II-VI Inc. (NASDAQ: IIVI). II-VI will pay $115 million for the business – and may not be done writing checks. II-VI also has paid $5 million in cash for an option to buy Oclaro's optical amplifier and micro-optics business for $88 million in cash.

Oclaro has received $92 million of the $115 million for the laser diode unit already. The rest will come via retention of existing accounts receivable, estimated at approximately $15 million, with the remaining $8 million withheld subject to traditional post-closing conditions. II-IV will receive all the assets of Oclaro Zurich, which include its GaAs fabrication facility as well as the corresponding high power laser diodes, VCSEL, and 980-nm pump laser product lines. The assets also include intellectual property, inventory, equipment, and a related R&D facility in Tucson, AZ.

Oclaro says it will continue the back-end manufacturing of the 980-nm pump and some high-power laser diode products at its Shenzhen, China, manufacturing facility and supply these to II-VI under a manufacturing services agreement. The employees in Shenzhen will remain on Oclaro’s payroll.

The optical components and subsystems vendor had announced this past May its intention to sell off pieces of its operations to repay some of its loans (see “Oclaro to sell assets to pay off new bridge loans”). This transaction is a first step along those lines, according to new CEO Greg Dougherty, who took over from the retired Alain Couder (see "Couder steps down at Oclaro").

"The sale of our gallium arsenide laser diode business is an important first step in our plan to restructure the company," explained Dougherty. "The Zurich-based business, including the team and its rich legacy, is a valuable asset and we wish II-VI and the team much future success. We will use the proceeds from the sale to fully repay our bridge financing and to begin restructuring the company for the future. We intend to further simplify our operating footprint, reduce our cost structure and focus our R&D investment in the optical communications market where we can leverage our core competencies."

That further simplification will come quickly if II-VI exercises its option to add Oclaro's optical amplifier and micro-optics business to its shopping cart. II-VI has 30 days to pull the trigger on the option.

This is the second asset deal between the companies. II-VI bought Oclaro's thin-film filter and interleaver product lines in late 2012 (see "II-VI to buy Oclaro's thin-film filter business and interleaver product line"). II-VI previously had purchased Aegis Lightwave (see "II-VI Inc. acquires Aegis Lightwave").

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