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Product category: Optical Transceivers, Transponders and Repeaters
News Release from: Bookham
Edited by the Electronicstalk Editorial Team on 9 October 2002

Bookham on the acquisition trail

Bookham Technology has entered into an agreement to acquire the optical transmitter and receiver and optical amplifier businesses of Nortel Networks Corp

Bookham Technology has entered into an agreement to acquire theoptical transmitter and receiver and optical amplifier businessesof Nortel Networks Corp. As part of the combination, NortelNetworks Ltd has also agreed to enter into a US $120.0 millionsupply agreement with Bookham. The combination is subject, interalia, to approval by Bookham's shareholders at anextraordinary general meeting to be held on 5th November 2002.The company believes that the economies of scale generated by thecreation of the new enlarged group will facilitate increased costefficiencies.

Furthermore, as part of an independent entity,there will be greater opportunity for the components generatedfrom the optical transmitter and receiver and optical amplifierbusinesses to be sold to other leading systems manufacturers whomay not previously have purchased components from Nortel, asNortel is one of their competitors.

Finally, by integrating theoptical transmitter and receiver and the optical amplifierbusinesses' products with Bookham's own active andpassive solutions, Bookham will take a significant step towardsbecoming a leading worldwide provider of optical components,modules and subsystems and thus towards meeting itscustomers' desire to have fewer suppliers offering a broaderrange of products.

Bookham will acquire the assets of the opticaltransmitter and receiver and optical amplifier businessesexcluding cash balances and accounts receivable, but includinginventory valued at GBP 195.7 million on a gross basis and GBP36.5 million on a net basis (after reserves for excess andobsolescence).

Bookham has purchased these assets free from tradedebtors and all other indebtedness.

Substantially all theemployees of the optical transmitter and receiver and opticalamplifier businesses will be joining Bookham as part of thecombination.

The consideration will be the issue to Nortel of:61,000,000 new ordinary shares of Bookham (which, immediatelyfollowing completion of the combination, would representapproximately 29.78% of the issued share capital of the company);warrants over 9,000,000 new ordinary shares of Bookham; and 3-5year loan notes to the value of US $50 million.

Bookham will alsopay to Nortel on Completion US $10.0 million for restructuringexpenses incurred by Nortel in connection with the combination.Nortel Networks Limited has agreed to purchase a minimum of US$120.0 million of optical components and related services fromBookham over a period of six quarters from completion of thecombination.

In addition, over the three years followingCompletion, Nortel Networks Limited has agreed to purchase fromBookham agreed percentages on a product-by-product basis of itstotal requirements for the optical components products that arecurrently being supplied to Nortel by the optical transmitter andreceiver and optical amplifier businesses, subject to certainperformance criteria.

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