Opnext is buying the company for 30 million in cash and 26.55 million shares, making the deal worth $172 million (€109 million) based on Opnext's closing share price on 8 July.
StrataLight shareholders would hold about 29% of the combined company after the deal's expected close in October or November, and StrataLight would get to nominate two independent directors to join Opnext's board.
Like Finisar and Optium, who are close to completing a merger that could make them the largest player in the components space, Opnext and StrataLight have managed to find a partner whose product lines are complimentary but without significant overlap.
Opnext's focus is on 10 Gbit/s and 40 Gbit/s optical modules for short-reach telecoms and datacoms applications, while StrataLight is more concerned with subsystem-level products for 40 Gbit/s optical transport.
StrataLight's products extend beyond traditional transponder modules to include line cards, subsystem units that include a controller, the software that interfaces with the customer, and complimentary technologies for high-speed networks such as modules that compensate for fibre dispersion characteristics, and circuits for enhanced forward error correction (FEC).
The pair claim that the combined company would be a 40 Gbit/s market leader, and have "unparalleled R&D capability" in 100 Gbit/s technologies.
Indeed, StrataLight acknowledged that it supplied the optics for Cisco's recent demonstration of native 100 Gbit/s transmission over Comcast's network (see Comcast & Cisco announce successful live network demonstration of the world's first 100GE router interface).
The acquisition looks attractive financially, with Opnext saying it would be accretive (i.e. contribute positively) to earnings in the first full quarter after closing, and be double digit accretive to earnings in the first fiscal year. What's more, Opnext notes that these forecasts don't take into account any supply chain synergies, or internal supply opportunities that would help to boost the bottom line.
"StrataLight is currently in a rapid growth phase," Opnext's president and CEO Harry Bosco said on the conference call. The start-up's revenues have already topped $30 million in the first calendar quarter of 2008, which ended in March, and are expected to grow 10% quarter on quarter for the rest of the year.