3 July 2012

Finisar to acquire RED-C Optical Networks

Fiber-optic communications component and subsystem maker Finisar Corp of Sunnyvale, CA, USA has agreed to acquire RED-C Optical Networks Inc, a Delaware corporation with subsidiary operations in Tel Aviv, Israel. Founded in 2000, RED-C has more than 140 subsidiary employees, all in Israel.

The acquisition will broaden Finisar's product lines primarily for telecom applications by adding key amplification technologies, including erbium-doped fiber amplification (EDFA), Raman amplification and dynamic Hybrid amplification modules. These technologies are considered critical for reconfigurable optical add-drop multiplexer (ROADM) line-cards and are increasingly important in cost-effectively extending the reach of transceivers and transponders, especially for 100Gb/s and 40Gb/s coherent transmission, ultra-long repeaterless links, and low latency networks.

“RED-C has been an innovator in optical amplification, which we view as an increasingly critical technology as networks get faster and more complex,” says Finisar's CEO Eitan Gertel. “As we have further penetrated the line-card market with our differentiated WSS [wavelength-selectable switch] technology, we see this acquisition as a tremendous opportunity to further innovate for our customers and advance our vertical integration strategy,” he adds.

“We expect RED-C’s high-performance EDFAs and Raman amplifiers, currently deployed in optical networks around the globe, to continue to deliver strong growth for the RED-C business,” says John Clark, Finisar's executive VP, technology and global R&D. “Going forward, we anticipate additional growth opportunities for the novel Hybrid Raman EDFA platform,” he adds. “The continuing rapid growth in global bandwidth demand is driving a major transition to coherent transmission and mesh topologies for optical networks. These new networks can deliver lower cost per bit and improved resilience, but are expected to require advanced optical amplification technologies to deliver optimum performance,” Clark continues. RED-C's Hybrid amplifier products, based on RED-C's core underlying IP, are unique in providing improved performance versus standalone EDFA and Raman optical amplifiers, it is claimed. “We expect RED-C's Hybrid optical amplification platform to replace standard EDFAs for next-generation LH [long-haul] and ULH [ultra-long-haul] optical networks,” he adds.

“We have been impressed with the RED-C amplifiers in terms of their performance and quality,” comments Mohamad Ferej, VP R&D of Transmode of Stockholm, Sweden, which supplies packet-optical networking solutions for the transport of data, voice and video traffic. “For next-generation networks, there will be an increased need for advanced EDFA, Raman and Hybrid amplifier solutions that RED-C provides,” he adds. "With the addition of optical amplifiers from RED-C, Finisar is now offering a complete portfolio of optical components and sub-systems to support our mission to develop innovative network solutions.”

The acquisition will be effected by the merger of RED-C with a subsidiary of Finisar. Finisar will pay about $23.7m in cash in initial consideration for all of RED-C's outstanding equity. As of 31 March, RED-C had $3.2m of cash and no debt. Finisar will also pay to stockholders and certain RED-C employees up to an additional $20m payable in cash or shares of Finisar common stock at Finisar’s option, subject to the achievement of financial performance targets related to RED-C products and technologies during 2013 and continued employment with Finisar.

Following the acquisition, RED-C will operate as a subsidiary of Finisar, with principal operations continuing at its current facility in Israel. Finisar expects the acquisition to be slightly positive to non-GAAP earnings per share in its fiscal year to end-April 2013. The acquisition is expected to be completed by end-July, subject to certain closing conditions.

Tags: Finisar

Visit: www.red-c.com

Visit: www.finisar.com