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Lucent buys Ortel for $3B
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February 7, 2000: 10:06 a.m. ET
Telecom gear maker eyes interactive cable with purchase of fiber optic firm
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NEW YORK (CNNfn) - Lucent Technologies agreed to acquire high-capacity fiber optic maker Ortel Corp. for $2.95 billion Monday, accelerating the telecom company's push to introduce two-way, interactive communications to cable television.
Murray Hill, N.J.-based Lucent (LU: Research, Estimates) said it will exchange 3.135 shares of its common stock for each Ortel share. Based on Lucent's closing price of $57 per share Friday, the deal values Ortel (ORTL: Research, Estimates) at $177.125 per share on a fully diluted basis, Ortel's closing price Friday.
Lucent shares rose 7/16 to 57-7/16 in early trading Monday while Ortel shares tumbled 8-15/16 to 168-3/16.
The companies expect the merger to close during the quarter ending June 30.
The acquisition gives Lucent, the nation's leading telecommunications equipment maker, access to Ortel's valuable laser and fiber optic technology used to expand the bandwidth of existing cable networks.
Lucent officials said they expect to use that technology to help speed the transition of cable television networks from featuring one-way broadcast capability to a more interactive medium featuring voice, video and data communications.
Ortel also boasts current relationships with General Instruments and Antec (ANTC: Research, Estimates), which account for roughly 15 percent and 11 percent, respectively, of the company's $72 million in annual sales.
Alhambra, Calif.-based Ortel is expected to become a part of Lucent Technologies' Microelectronic Group. No job cuts or reorganizations are anticipated.
The purchase is expected to result in an undisclosed one-time charge against Lucent's earnings during the third quarter to account for "in-process research and development."
Excluding that charge and the amortization of goodwill, the company expects the merger to dilute Lucent's earnings by a penny a share during fiscal 2000. Including the amortization of goodwill and other acquired intangible assets, Lucent's fiscal 2000 profit is expected to fall 8 cents per share.
Analysts polled by research firm First Call Corp. were expecting Lucent to earn $1.38 per share during fiscal 2000. 
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