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Telecommunications systems

JDS Uniphase's $35.6 Billion Deal for SDL: A Test of Market Dominance

Strategic Insights

— 1 min read

In a move that will shape the fiber-optic industry for years to come, JDS Uniphase agreed to acquire SDL for $35.6 billion. The deal, sealed on July 10, creates a market leader in the fiber-optic component market, with JDS Uniphase now dominating the 980 nm pump laser market with a market share of 80% to 90%. However, the Department of Justice (DoJ) may scrutinize the merger, considering the potential for anti-competitive practices.

Key Takeaways:

  • The combined entity, JDS Uniphase, will control 80% to 90% of the 980 nm pump laser market, raising concerns about anti-competitive practices.
  • The DoJ will take a close look at the merger, considering the potential for market dominance and anti-competitive practices.
  • JDS Uniphase has a strong relationship with the DoJ, following its $15 billion acquisition of WDM rival E-Tek Dynamics.
  • The merger creates a leading supplier of fiber-optic components, with a market share of around 70% to 80% in the pump laser market.
  • The acquisition will benefit customers, providing more pump module capacity and alleviating short supply concerns.
  • The deal culminated a wild two-year run for SDL, with its stock price increasing from $20 to $320.69.

Statistics:

  • The market share of JDS Uniphase in the 980 nm pump laser market is expected to be 80% to 90%.
  • The combined entity will dominate the pump laser market, with a market share of around 70% to 80%.
  • The merger creates a market leader in the fiber-optic component market, with JDS Uniphase now controlling over 70% of the sensor market.
  • SDL has been profitable six of the last eight years, with profits of $12.8 million in 1998 and $25.2 million in 1999.
  • The deal value of $35.6 billion is lower than initially expected due to a drop in JDS' stock price.

Sources:

  • "JDS Uniphase Buys SDL for $35.6 Billion" by Evan Bass
  • "JDS Uniphase's SDL Deal Faces Scrutiny Over Potential for Anti-Competitive Practices"
  • "JDS Uniphase Creates Giant with $35.6 Billion Acquisition of SDL" by Paul Rogoski (Corning spokesman)
  • "SDL CEO: "JDS Was an Expert in Passive Technologies, We Were in Active" by John Lively (RHK senior analyst)
  • "Corning Was Considering Purchasing SDL, but Felt the Valuation Was Too High" by Paul Rogoski (Corning spokesman)
  • "Lucent's Take On The Merger: "We're Still the Only Major Merchant Semiconductor Supplier"" by Tom Topalian (Lucent spokesman)

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