Oclaro Acquires WSS Company Xtellus
December 17, 2009
SAN JOSE, Calif., - Oclaro, Inc. (NASDAQ: OCLR) today announced it has acquired Xtellus, Inc. Oclaro now has a complete family of wavelength selective switches (WSS) capable of powering reconfigurable optical add/drop multiplexer (ROADM) applications over the entire optical network, from the edge to the core. Many customers have been asking Oclaro to become a provider of a total solution, with a comprehensive line of WSS products, to help satisfy their regeneration and routing needs. Oclaro has now responded. Combining the WSS portfolio with Oclaro's integrated subsystem design capability also positions the company for a strong position in the high growth ROADM market.
WSS is one of the fastest growing segments of the optical component market and the acquisition of Xtellus will play an important role in the continuing growth story of Oclaro. The acquisition also completes the overall portfolio of product areas required to support Oclaro's strategic positioning throughout the metro and long haul areas of the telecommunication market.
Xtellus uses a strategic mix of core technologies, both liquid crystal and MEMS, that will now uniquely enable Oclaro to deliver a complete family of scalable WSS to power ROADM applications across edge and core optical networks. Smaller port count edge WSS applications, where managing product costs aggressively is a key to success, are based on liquid crystal technology. For core WSS applications, Xtellus uses a combination of high reliability 1-Axis MEMS to switch across high port counts, while also maintaining liquid crystal for attenuation.
Under the terms of the acquisition agreement, stockholders of Xtellus will receive shares of common stock of Oclaro worth $33 million, a portion of which will be held in escrow for 18 months to support Xtellus' indemnification obligations to Oclaro. The agreement also provides for a value guarantee under which stockholders could receive additional consideration subject to both the share price of Oclaro failing to achieve a certain price level at the end of calendar year 2010 and on the Xtellus business achieving certain revenue targets over Oclaro's corresponding 12 month fiscal period.