Lumentum buys telecom transmission assets from IPG Photonics

Fresh off the close of its acquisition of NeoPhotonics, Lumentum Holdings Inc. (NASDAQ: LITE) reveals that it has purchased IPG Photonics' (NASDAQ: IPGP) telecom transmission product lines. Financial details of the transaction were not disclosed except the revelation that Lumentum made its buy in cash.

IPG has offered optical amplifiers to the market and purchased smart optical transceiver developer Menara Networks in 2016 (see “IPG Photonics to enter optical pluggable module market with Menara Networks acquisition”). It’s the digital development team that came with that acquisition that Lumentum prizes most. "I am very excited to add such highly complementary and differentiated transceiver product lines and ASIC capabilities, which help to expand our addressable market and augment our technology capabilities," said Dr. Beck Mason, senior vice president and general manager, telecom transmission at Lumentum. "This acquisition brings a talented team developing digital communications ASICs, including coherent DSPs, which complements our silicon and indium phosphide photonic integrated circuit capabilities and creates opportunities for increased vertical integration in future optical transmission modules.

"Increasingly customers in the cable MSO and wireless network operator space are turning to wavelength tunable pluggable transceivers to help expand their network capacity and this acquisition brings highly synergistic product lines addressing this rapidly growing opportunity," Mason added.

For IPG, which noted the assets include Menara Networks and a subsidiary in Brazil, the same brings cash and the ability to focus on core markets. “While we have made good progress in developing fundamental technologies in our telecom transmission business, our ability to scale these product lines would require a step-up in investment that we believe would be better spent on our core materials processing and adjacent markets,” said Dr. Eugene Scherbakov, IPG Photonics' CEO.

“After an in-depth review, we have determined that participation in the broader telecom market is non-core to IPG’s strategy,” he continued. “Our strategy is to remain focused on revenue diversification and growth opportunities in markets where we can increase our value proposition to customers by delivering advanced laser processing and technology solutions. We are exploring substantial new markets and applications where fiber lasers are replacing existing laser and non-laser technologies by improving efficiency, productivity, or enabling technological breakthroughs for our customers. We would like to thank our telecom transmission employees for their contributions and wish them success with Lumentum, a market leader in optical communications."

Both companies said the transaction would not have an immediate material effect on their respective bottom lines. IPG allowed that the divestiture would lead to a reduction in R&D spending and operating expenses going forward.

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