Lucent Broadens its Reach With Ortel Acquisition

Ortel Corporationision (CATV) is the latest target market for Lucent Technologies' Microelectronics Group (Breiningsville, PA), which has signed an agreement to acquire optoelectronic component supplier <%=company%> (Alhambra, CA) in a stock deal worth approximately $2.95 billion. Ortel produces optoelectronic components for CATV applications such as high-capacity networks for next-generation services to the home, including Internet telephony.

The announcement comes as little surprise in a fiber optic communications market where acquisitions have dominated the headlines for the last several quarters. Last fall, Lucent signed on Ortel to supply uncooled 980 nm pump lasers for its line of metropolitan-area erbium-doped fiber amplifiers (see Ortel to Supply Lucent with Pump Lasers for Metro EDFAs). The supply agreement was something of a departure from strategy for Ortel, which had previously announced plans to pull out of the pump laser market sector, citing late entry and increasing price erosion as major obstacles to profitability (see Ortel Focuses on Broadband Market). Now, the company's revived pump laser capability has proven to be a sweetener in the acquisition deal, which is slated for completion in June of 2000.

Under the terms of the agreement, each share of Ortel will be converted into 3.135 shares of Lucent. Based on Lucent's closing stock price of $57 on February 4, the acquisition would be valued at approximately $2.95 billion, or $177.125 per Ortel share, on a fully diluted basis.

Ortel will become part of Lucent's optoelectronics component division and Ortel CEO, Stephen Rizzone, will report into Optoelectronics President Dan DiLeo. Ortel's 550 employees will remain at their current locations.

Edited by Kristin Lewotsky