JDSU To Separate Into 2 Public Companies
JDSU (NASDAQ: JDSU)
-- Enables greater management agility and focus as the pace of technology
-- Two independent and publicly traded companies expected to enhance
value by offering shareholders clear investment opportunities in
distinct growth markets.
-- An industry-leading optical components and commercial lasers
company, positioned for growth opportunities, including the
expansion of cloud networks and high-capacity data centers.
-- A network and service enablement company focused on the industry's
transition to software-defined networks (SDN) and the need for
increased network, service and application visibility. JDSU's
current optical security business (OSP) will operate as a separate
business segment inside this company.
-- Expected combined expense reduction of approximately $50 million.
-- Expected to be completed through a tax-free spinoff structure with
separate corporate brand identities for each business to be announced
at a later date.
Expect to complete transaction by the third calendar quarter of 2015.
JDSU today announced its Board of Directors has unanimously approved
a plan to separate JDSU into two publicly traded companies:
-- An optical components and commercial lasers company ("CCOP")
consisting of JDSU's current Communications and Commercial Optical
Products segment. The CCOP company, with its long-standing reputation
for optical innovation and quality, serves a $7.4 billion optical
communications market expected to grow at a compounded rate of 11
percent over the next four years(i). It also addresses an approximate
$2.5 billion commercial lasers market, growing at a forecasted 7
-- A network and service enablement company ("NSE") consisting of JDSU's
current Network Enablement, Service Enablement and Optical Security
and Performance Products (OSP) segments. The stand-alone NSE company
will be a leader in its core businesses, addressing an approximate $7
billion network and service enablement market expected to grow at 6-8
percent annually(iii). The NSE company will primarily focus its
investments in higher growth markets, particularly software supporting
virtualized and software-defined networks. The optical security
business addresses an approximate $1.1 billion market growing at an
expected 6-8 percent(iv).
The separation is expected to occur through a tax-free pro rata spinoff
of CCOP to JDSU shareholders, though the structure is subject to
change based upon various tax and regulatory factors.
"Over the past five years, JDSU has invested heavily in innovation
that is well aligned with the industry's best growth opportunities,
including cloud networking, data center expansion and
software-defined networks," said Tom Waechter, JDSU president and
CEO. "These opportunities extend beyond the traditional telecom
ecosystem and now include web services, over-the-top, enterprise and
other customers. We believe two fundamentally focused companies best
position us to stay ahead of the accelerating pace of technology
change and to compete even more effectively across the unique markets
we serve today."
Waechter added, "Now is the time to make this transition, giving
these businesses the opportunity to maximize their success while
providing shareholders with distinct investment opportunities in two
JDSU believes the separation will:
-- Allow CCOP to devote enhanced focus to its leading position in
telecom, expand its position in the high-growth datacom market, and
grow its commercial lasers and 3-D sensing businesses.
-- Enable NSE to continue its leadership in network enablement, while
continuing to transition to a more software-centric company aligned
with the industry's rapid shift to software defined networks.
-- Create clearer investment profiles for both companies.
-- Enhance shareholder value.
The stand-alone CCOP will be a global leader in optical components
and subsystems for the telecommunications market, with growth
opportunities in data communications, driven by cloud networking and
data center build outs. The company will continue to focus on growing
its commercial lasers and 3-D sensing applications. CCOP's FY14
revenues were $794.1 million.
Alan Lowe, CCOP's president since 2008 and executive vice president
of JDSU, is the CEO-designate of the CCOP stand-alone company.
"The board and I believe Alan is the right executive to lead this new
company," said Waechter. "He has built a strong team and has a solid
track record of execution during his seven years at JDSU. Alan has a
deep understanding of and familiarity with CCOP's markets and
customers. We are confident he will lead this new company to even
The stand-alone NSE will be a leading provider of instruments,
software and services for the fast, cost-effective deployment and
operation of next generation networks. Driven by the proliferation of
connected devices and applications running on the network, and the
need for increased network visibility, NSE's Service Enablement
business is focused on software solutions that support the industry's
transition to SDN. SDN is expected to influence 30-40 percent of all
network spending over the next six years(v). Included in this new
company will be JDSU's OSP business, a leader in anti-counterfeiting
solutions for currency authentication and high-value optical
components and instruments for security, safety, electronics and
other applications. The combined revenue for NSE and OSP in FY14 was
Tom Waechter, JDSU's president and CEO, will continue in this role
with the stand-alone NSE company.
JDSU shareholders will receive a pro rata distribution of shares in
the stand-alone CCOP company via a tax-free spinoff. The separation
of the two companies and the distribution of the new CCOP company's
shares to JDSU shareholders is expected to be completed in the third
calendar quarter of 2015. The separation is subject to the
satisfaction of closing conditions, including, among others,
obtaining final approval from the JDSU Board of Directors, receipt of
tax opinions, the effectiveness of an applicable registration
statement with the Securities and Exchange Commission and
satisfaction of foreign regulatory requirements.
During the periods preceding the separation, JDSU expects to incur
significant one-time charges related to the separation and to
achieving the expense savings referenced in the highlights. Cash
expenditures to obtain the cost savings are expected to be between
$75 and $100 million.
Centerview Partners and Goldman, Sachs & Co. are serving as advisors
to the Company for this transaction.
For the fiscal first quarter of 2015 ending September 27, 2014, the
Company is reaffirming guidance of non-GAAP net revenue of $405 to
$425 million and non-GAAP earnings per share of $0.08 to $0.12.
The Company will discuss this announcement and other related matters
during its previously scheduled Analyst Day at Noon Eastern Time,
9:00 a.m. Pacific Time on September 11, 2014 in a live webcast, which
will also be archived for replay on the Company's website at
www.jdsu.com/investors. This press release is being furnished in a
Current Report on Form 8-K with the Securities and Exchange
Commission, and will be available at www.sec.gov.
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