Bookham buys Nortel Networks divisions for EUR120m

Bookham Technology has agreed to acquire the Optical Transmitter and Receiver and Optical Amplifier Businesses of Nortel Networks. Nortel has also agreed to enter into a EUR130m supply agreement with Bookham.

Bookham believes that there are savings to be made and, as part of an independent entity, more opportunity for the components generated from the transceiver and amplifier businesses to be sold to other manufacturers who may not previously have purchased from a competing Nortel.

Bookham will acquire the divisions’ assets excluding cash balances and accounts receivable, but including inventory valued at EUR300m gross (EUR57m net). Most of the Nortel employees will be joining Bookham as part of the combination.

The consideration will be the issue to Nortel of: 61,000,000 new ordinary Bookham shares (or about 30% of Bookham’s issued share capital); warrants of over 9,000,000 new ordinary shares; 3–5 year loan notes worth USD50m.

Bookham will also pay Nortel EUR11m for restructuring expenses incurred by Nortel in connection with the combination.

For its part, Nortel Networks has agreed to purchase a minimum of EUR120m of optical components and related services from Bookham over a period of six quarters from completion of the deal. Over the following three years, Nortel has agreed to buy from Bookham agreed percentages of its requirements for the components previously produced internally .

Based on the mid-market closing price of Bookham shares on 4 October 2002, the deal was valued at EUR120m, assuming full exercise of the warrants and including the payment on completion of USD10m restructuring expenses, but excluding interest payable on the loan notes.

Giorgio Anania, president and CEO of Bookham, said, “We believe that the optical communications market has good long-term potential, though market conditions are currently depressed and are likely to remain depressed for the next several quarters.”

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