Lumentum to acquire Cloud Light for £614m
Thu 2 Nov 2023
Lumentum is set to acquire Cloud Light Technology with a transaction value of approximately £614 million ($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 centre infrastructure.
“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,” said Alan Lowe, Lumentum president and CEO.
Nearly all of Cloud Light’s more than £163.9 million ($200 million) 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 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 centre products anticipated to grow at a 30% CAGR and exceed £8.1 billion ($10 billion) by 2028.
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 centre infrastructure revenue in the 12-month period following the transaction close.
With this acquisition, Lumentum will look to serve the growing needs of cloud and networking customers, particularly those focused on optimising their data centre infrastructure for the demands of AI and ML.
The transaction is expected to close by the end of calendar 2023, subject to receipt of regulatory approvals and other customary closing conditions.
“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.
“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 centre customers,” said Dr. Dennis Tong, Founder and CEO of Cloud Light.
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.
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