Laser components maker II-VI (COHR -4.52%) announced yesterday that it has bought Oclaro's semiconductor laser business for $115 million. Investors shaved about $84 million off of II-VI's market cap as shares dropped 7.8% after the acquisition was announced.
II-VI explained its purchase by saying that "the acquisition provides II-VI with semiconductor laser technology used in industry-leading laser system products including fiber lasers and direct diode lasers for material processing, medical, consumer and fiber optic communication applications," and that it will "complement II-VI's broad and differentiated portfolio of engineered materials with a world-class semiconductor laser platform."
II-VI paid for its purchase with $92 million cash and $15 million in the new subsidiary's accounts receivable. There is also $6 million cash to be paid at a later date and $2 million more that is being reserved against "potential working capital adjustments."
II-VI expects the new subsidiary to generate more than $70 million in annual revenue, but to dilute this fiscal year's earnings per share by $0.08 to $0.12.
II-VI also paid another $5 million for an exclusive option to buy Oclaro's amplifier and micro-optics business for $88 million in cash. This option will expire if not exercised by II-VI within 30 days.
The two companies also entered into a multi-year supply agreement under which II-VI will provide semiconductor laser products to Oclaro's amplifier and micro-optic business.
-- Material from The Associated Press was used in this report.
