SAN JOSE, Calif. The merger between JDS Uniphase and E-Tek Dynamics Inc. closed Friday (June 30), capping the largest deal to date in the optical components market.
Federal regulators, who had scrutinized the deal for antitrust violations, asked only that the companies divest their thin-film business. Federal approval came on June 22, and E-Tek shareholder approval was granted at a special meeting held June 28.
JDS Uniphase, itself a product of a large merger, will offer 2.2 shares of stock for every outstanding E-Tek share. The deal was worth $15 billion when it was announced and has risen to nearly $19 billion in the meantime.
The merger bolsters JDS' standing as the largest optical components manufacturer and, as such, has caused concern throughout that industry. JDS along with competitors Corning Inc. and Lucent Microelectronics has been acquiring companies large and small at a brisk pace.
Speaking on a panel at the WDMCon conference in May, Doug Meyer, chief technical officer of systems builder Canoga Perkins Corp. (Chatsworth, Calif.), articulated some of the worry about the merger trend.
"Quite frankly, I'm not happy" with the spate of mergers, he said. "Not only is a company like JDS capable of moving into our space, but if they have complete vertical integration, they can lock you out of a space."
Jerry Bautista, chief technical officer of WaveSplitter Technologies Inc. (Fremont, Calif.), saw some reason for encouragement, however, noting that the mass of mergers has opened possibilities for independent startups.
"There's a whole middle tier that's missing now in the components industry," Bautista said at WDMCon. "If you have nothing above your head, there's no reason why you can't start looking up there."
The June 22 consent decree between JDS and the Department of Justice requires E-Tek to relinquish its first right of refusal on portions of the manufacturing capacity of thin-film vendors Barr Associates, Hoya Corp. USA, OCJ Corp. and Herrmann Technology Inc., the latter of which was recently acquired by Lucent.
The merger, which takes effect at 11:59 p.m. Friday, makes E-Tek a wholly-owned subsidiary of JDS. E-Tek chairman and chief executive officer Michael Fitzpatrick will be an advisor during the integration process, while Sanjay Subhedar, E-Tek chief operating officer, will become president of the newly created E-Tek business unit.