Lumentum beefs up reach into data centers with Cloud Light acquisition

Lumentum is acquiring Cloud Light for about $750 million to shore up its cloud intra-data center capabilities. The company said that the combined company will deliver a more than five-fold expansion in Lumentum’s cloud intra-data center served opportunity.

When the acquisition is closed, the purchase will be paid in cash and the assumption and substitution of outstanding unvested Cloud Light options. The transaction has been unanimously approved by the Boards of Directors of both companies and by Cloud Light’s shareholders.

Lumentum expects the Cloud Light acquisition to accelerate its push into the fastest-growing segments of the multibillion-dollar opportunity for optical modules used in cloud computing data center infrastructure. Nearly all of Cloud Light’s more than $200 million revenue in the last 12 months was derived from 400G or higher speed transceiver sales. In the most recent quarter, over half of Cloud Light’s optical transceiver revenue was derived from 800G modules.

By making this acquisition, Lumentum said it will be well-positioned to serve the growing needs of cloud and networking customers, particularly those focused on optimizing their data center infrastructure for the demands of AI/ML. Lumentum will be able to deliver immediate customer value with a more comprehensive product and technology portfolio, enabling customers to manage the escalating compute and interconnect requirements of AI workloads more effectively. The combination also will combine design and assembly, test, and packaging capabilities with Lumentum’s global scale and customer reach.

“With Cloud Light, we are making a strategic investment to significantly expand our opportunities in the cloud data center and networking infrastructure space,” said Alan Lowe, Lumentum president and CEO. “Cloud Light provides us with the highest speed transceiver solutions at scale and complements our advanced component capabilities. This results in a broad product and technology portfolio that addresses a wide range of cloud operator needs.”

Lumentum intends to finance the transaction through cash from its balance sheet. The transaction is expected to close by the end of calendar 2023, subject to receipt of regulatory approvals and other customary closing conditions.

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