Nortel Networks has acquired Sydney-based optical components manufacturer Photonics Technologies. The acquisition is part of a $600 million global initiative by Nortel to invest in the optical components market in areas including systems, equipment, and research and development.
Photonics was already partially owned by Nortel, which took a one-third equity stake in the company in 1998. In the new deal, Photonics will join Nortel's High Performance Optical Components Solutions unit (HPOCS).
While the price of the deal has not been finalised, the acquisition is expected to be worth around $35.5 million, according to Nortel.
Photonics must achieve "certain business objectives" based on revenue growth over the next two years to receive the total $35.5 million, said Steve Thurley, Nortel's director of strategic business development, high performance. The majority of the cash transaction has already been completed, he added.
"It's related to growth. We are confident it will be achieved," Ralph Betts, Photonics' managing director, said.
Photonics, formed in Sydney in 1993, manufactures high-speed optical technology including circulators, dynamic flattening filters and dense wavelength division multiplexing (D-WDM) technology. 1999 revenues for the company were over $US2.5 million, with more than 90 per cent coming from export deals.
According to Reg Bird, president of service provider solutions, Nortel Networks South Pacific, optical technology is the only technology capable of handling the growth and scalability of the internet. He said the worldwide market for optical component technology is expected to grow from $US19.4 billion in 1999 to $US52.3 billion in 2003.
For Nortel, significant growth has already been evident with Q1, 2000 revenue from Nortel's optical electronics division increasing 150 per cent since the same quarter the previous year, Bird said.
"Nortel has demonstrated its commitment to Australia by increasing its investment here . . . the acquisition also demonstrates the state-of-the-art technology from Photonics," he said.
Thurley said the Photonics business will be integrated with a newly established Nortel working group focusing on optical electronics. According to Thurley, Nortel set up the new group several weeks ago for research and development purposes.
"We will merge the resources together with Photonics to create a large entity and group in the optical electronic market for Australia," he said.