Oclaro surges as it agrees $1.8bn buyout with Lumentum

Shares in optical components manufacturer Oclaro surged in pre-market trade on Monday as it agreed to be bought by Lumentum Holdings, a provider of photonics products, for $1.8bn.

Under the terms of the offer, Oclaro shareholders will be entitled to receive $5.60 in cash and 0.0636 of a Lumentum share for each of their shares, valuing Oclaro at $9.99 a share. The price represents a premium of 27% to Oclaro's closing price on 9 March.

Lumentum president and chief executive officer Alan Lowe said: "Joining forces with Oclaro strengthens our product portfolio, broadens our revenue mix, and positions us strongly for the future needs of our customers. Oclaro brings its leading Indium Phosphide laser and Photonic Integrated Circuit and coherent component and module capabilities to Lumentum.

"The combined company will drive innovation faster and accelerate the development of products to enable our customers to win. We are delighted to welcome the talented Oclaro team to Lumentum and look forward to a swift completion of the transaction with a focus on supporting our customers and delivering shareholder value."

Oclaro CEO Greg Dougherty said: "I am very pleased that two of the optical industry leaders, Oclaro and Lumentum, will join forces. Together, we will be an even stronger player in fibre optic components and modules for high-speed communications and a market leader in 3D sensing. This is a fantastic combination for all of our stakeholders, including stockholders, employees, customers and partners."

The deal, which Lumentum intends to fund through a combination of cash on hand and $550m in debt financing, is expected to generate more than $60m of annual run-rate synergies within 12 to 24 months of closing and to be immediately accretive to non-GAAP earnings per share.

At 1310 GMT, Oclaro shares were up 26% to $9.87 in pre-market trade.