- Combination expected to deliver a more than five-fold expansion
in Lumentum’s cloud intra-data center served opportunity
- Served opportunity expected to grow at over 30% CAGR through
2028, driven by investments to support the rapid proliferation of
Artificial Intelligence and Machine Learning (AI/ML)
applications
- Acquisition expected to be immediately accretive to non-GAAP
earnings per share and to more than double Lumentum’s cloud
intra-data center infrastructure revenue in the 12-month period
following the transaction close
- Lumentum to host an investor call today, October 30, at 5:30
a.m. PT to discuss the transaction
Lumentum Holdings Inc. (NASDAQ: LITE) (“Lumentum”) and Cloud
Light Technology Limited (“Cloud Light”) today announced that they
have entered into a definitive agreement under which Lumentum will
acquire Cloud Light with a transaction value of approximately $750
million, subject to certain adjustments. At the time of closing,
transaction consideration 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.
The acquisition of Cloud Light is expected to accelerate
Lumentum’s push into the fastest growing segments of the
multibillion-dollar opportunity for optical modules used in cloud
computing data center infrastructure. Cloud Light has a
demonstrated track record of developing and manufacturing the
highest-speed connectivity solutions at the leading edge of new and
rapidly growing technology transitions. Nearly all of Cloud Light’s
more than $200M 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.
With this acquisition, Lumentum 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 more effectively manage the
escalating compute and interconnect requirements of AI workloads.
The combination also brings best-in-class design and assembly,
test, and packaging capabilities together 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.”
“We are confident that this transaction will deliver
substantial, long-term value to our stockholders, with immediate
earnings accretion and accelerated revenue growth. We look forward
to welcoming Cloud Light’s very talented team to Lumentum,”
concluded Mr. Lowe.
“Today’s announcement is a pivotal milestone in the history of
Cloud Light, and a testament to the hard work and dedication of our
employees,” said Dr. Dennis Tong, Cloud Light Founder and CEO. “We
founded the company with a vision that our deep expertise in
high-volume precision manufacturing would result in a superior
value proposition for cloud data center customers. Having worked
closely with the technology teams within leading cloud operators,
we believe we can build upon our success to date and further
accelerate cloud data center growth by combining Lumentum’s
advanced photonic integration and transmission technologies with
our highly automated packaging and manufacturing processes. We look
forward to joining the Lumentum team and beginning an exciting new
chapter.”
Compelling Strategic and Financial Benefits
- Captures AI inflection with expanded intra-data center
opportunity: The highly complementary combination squarely
positions Lumentum as a leader in providing photonics to cloud
operators, enabling more than a five-fold expansion in the
company’s served opportunity inside of data centers. With the
advent of generative AI, cloud network needs for 400G and higher
speed optical transceivers have accelerated rapidly, with the
opportunity for these intra-data center products anticipated to
grow at a 30% CAGR and exceed $10B by 2028. Cloud Light provides
the highest speed optical transceiver products to leading
hyperscale cloud customers, with even higher-speed solutions well
along in their development, complementing Lumentum’s existing
portfolio of laser transmitters and other integrated components for
data center transceivers.
- Better equipped to address future customer roadmaps: AI
models are driving an exponential increase in compute requirements,
where performance is now doubling every 3 to 4 months, compared to
the historical doubling every two years according to Moore’s Law.
Scaling workloads even higher is limited by existing network and
interconnect bottlenecks. With the addition of Cloud Light,
Lumentum better addresses these challenges – both now and into the
future – by combining advanced optical interconnect technologies
based on chip-scale photonic integration, together with highly
automated packaging and manufacturing technologies.
- More strategic partner to cloud and AI infrastructure
customers: With Cloud Light, Lumentum can more effectively
address the growing and diverse needs of cloud operator and AI
infrastructure providers. This includes providing next-generation
optical connectivity and optical switching within data centers, as
well as coherent pluggable modules and optical line system
components for data center interconnect applications. With
Lumentum’s vertical integration capabilities in components and
diversity in its global manufacturing footprint, customers can
benefit from improved security of supply and superior technology
and cost roadmaps.
- Amplifies edge and metro networking opportunities: Cloud
Light’s proven capabilities in low-cost product development and
high-volume manufacturing are relevant not only for cloud data
center and data center interconnect solutions, but also for network
edge applications, including those served by direct detect and
coherent tunable DWDM transceivers. A broader set of networking
customers will benefit from the added advanced packaging
technologies and manufacturing capabilities offered by this
combination.
- Immediately accretive to Lumentum’s earnings and accelerates
Lumentum growth: The transaction is expected to be immediately
accretive to Lumentum’s non-GAAP earnings per share and is expected
to more than double Lumentum’s cloud data center infrastructure
revenue in the 12-month period following the transaction close. In
the last twelve months, over 90 percent of Cloud Light’s revenue
was derived from 400G and higher speed products, and in their most
recent quarter, over half of Cloud Light’s optical transceiver
revenue was derived from 800G transceiver products.
Transaction Financing and Approvals
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.
Advisors
BofA Securities served as the exclusive financial advisor to
Lumentum and Wilson Sonsini Goodrich & Rosati, Professional
Corporation served as legal advisor. Morgan, Lewis & Bockius
LLP served as legal advisor to Cloud Light.
Transaction Conference Call
Lumentum will hold a conference call today, October 30, 2023, at
5:30 a.m. PT/8:30 a.m. ET to discuss this announcement. A live
webcast of the call and the replay will be available on the
Lumentum website at http://investor.lumentum.com. To listen to the
live conference call, dial (888) 259-6580, (206) 962-3782, or (416)
764-8624 and reference the conference ID 95405221. Supporting
materials for the call’s presentation will be posted on
http://investor.lumentum.com under the “Events and Presentations”
section prior to the call.
A conference call replay will be available from October 30,
2023, at 11:30 a.m. ET through November 6, 2023, at 11:59 p.m. ET.
To access the replay, dial (877) 674-7070 or (416) 764-8692 and
reference the passcode 405221 #.
This press release is being furnished as an exhibit to a Current
Report on Form 8-K filed with the Securities and Exchange
Commission and will be available at http://www.sec.gov/.
About Lumentum
Lumentum (NASDAQ: LITE) is a market-leading designer and
manufacturer of innovative optical and photonic products enabling
optical networking and laser applications worldwide. Lumentum
optical components and subsystems are part of virtually every type
of telecom, enterprise, and data center network. Lumentum lasers
enable advanced manufacturing techniques and diverse applications
including next-generation 3D sensing capabilities. Lumentum is
headquartered in San Jose, California with R&D, manufacturing,
and sales offices worldwide. For more information, visit
www.lumentum.com.
About Cloud Light
Cloud Light Technology Limited designs, markets, and
manufactures advanced optical modules for automotive sensors and
data center interconnect applications. The company’s core team has
over 18 years of experience in the design of advanced optical
modules, with a rich heritage in advanced manufacturing and
delivering superior quality and customer experience. Founded in
2018, Cloud Light is headquartered in Hong Kong, with R&D
centers in Hong Kong and Taiwan and state-of-the-art manufacturing
facilities in Dongguan, China and Southeast Asia. For more
information, visit www.cloudlight.com.hk.
Forward-Looking Statements
This communication contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Forward-looking statements generally relate to future
events, including the timing of the proposed transaction and other
information related to the proposed transaction. In some cases, you
can identify forward-looking statements because they contain words
such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,”
“could,” “intends,” “target,” “projects,” “contemplates,”
“believes,” “estimates,” “predicts,” “potential” or “continue” or
the negative of these words or other similar terms or expressions
that concern the proposed transaction and our expectations,
strategy, plans or intentions regarding it. Forward-looking
statements in this communication include, but are not limited to,
(i) expectations regarding the timing, completion and expected
benefits of the proposed transaction, (ii) expectations and beliefs
with respect to customers, the opportunity and market that combined
company will serve, products and technologies of the combined
company and future operations, and (iii) the expected impact of the
proposed transaction on Lumentum’s business and financial results.
Expectations and beliefs regarding these matters may not
materialize, and actual results in future periods are subject to
risks and uncertainties that could cause actual results to differ
materially from those projected. These risks include the risk that
the transaction may not be completed in a timely manner or at all;
the ability to secure regulatory approvals on the terms expected in
a timely manner or at all; the effect of the announcement or
pendency of the transaction on our business relationships, results
of operations and business generally; risks that the proposed
transaction disrupts current plans and operations; the risk of
litigation and/or regulatory actions related to the proposed
transaction; changing supply and demand conditions in the industry;
and general market, political, economic and business conditions.
The forward-looking statements contained in this communication are
also subject to other risks and uncertainties, including those more
fully described in filings with the Securities and Exchange
Commission, including Lumentum’s Annual Report on Form 10-K for the
fiscal year ended July 1, 2023 as well as other filings made by
Lumentum with the SEC from time to time and available at
www.sec.gov. These forward-looking statements are based on current
expectations, and with regard to the proposed transaction, are
based on Lumentum’s current expectations, estimates and projections
about the expected date of closing of the proposed transaction and
the potential benefits thereof, its business and industry,
management’s beliefs and certain assumptions made by Lumentum, all
of which are subject to change.
Lumentum undertakes no obligation to update the information
contained in this communication or any other forward-looking
statement.
Category: Financial
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version on businesswire.com: https://www.businesswire.com/news/home/20231030099888/en/
Investors: Kathy Ta, 408-750-3853,
investor.relations@lumentum.com Media: Noël Bilodeau,
408-439-2140, media@lumentum.com or Hotwire Global,
lumentum@hotwireglobal.com
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