The buyout cost is 2.75 billion dollars. Furukawa will have the world second largest share of optical fiber market ,succeeding Lucent’s worldwide patents.
OFS is a solution of Lucent that spun off from AT&T in 1996, and is manufacturing and marketing optical fibers, optical fiber cables, specialty fibers for DWDM, and optical connectors / components on a worldwide scale, and its annual sales for fiscal year 2000 (ending in September) was 1.925 billion dollars. After acquisition, Furukawa plans to form a joint venture with CommScope, Inc. in the U.S.A. for the optical fiber and optical fiber cable business. As for specialty fiber for DWDM, a separate company with 100 % self-governing management will be formed. Their trade names, presidents, capital shares and etc. are to be determined.
In the optical fiber and component market, although demand saturation is emerging in North America since the start of 2001, there is a continuing demand for IT related products globally, carrying the prospect of high growth rates from the mid- to long-range point of view.
OFS possesses world leading technology and extensive intellectual property in the optical fiber and component field, equaling Corning Inc., serving many excellent customers in the world. Since their business is complementary to that of Furukawa Electric in many areas, it is expected that the combination of the two will result in enlargement of profit in the future.
Promising areas to be targeted at include all-wave (AW) fiber for metro WDM transmission, premium fiber such as TrueWave RS for long-haul DWDM transmission, and dispersion compensating optical fiber module for DWDM. It is considered that, for example, the AW fiber with higher performance and lower cost will be possible when the design capability of OFS and the process development capability of Furukawa Electric are combined together. Moreover, in the case of dispersion compensating optical fiber module for DWDM where OFS ranks first in the world, the products such as optical fiber amplifier, Raman amplifier, and optical subsystems are expected to gain power greatly in the marketplace, when Furukawa Electric’s technology in pumping laser and active components is incorporated.
What is worthy of special mention with this buyout is the acquisition of intellectual property. While major patents for optical fibers have been held by Lucent including ex-Bell Laboratories preceding in this field together with Corning, the buyout at this time means that the group of Furukawa Electric takes over the proprietary right of patents belonging to Lucent as well as the worldwide right of use of patents belonging to Corning.
In terms of the optical fiber and optical fiber cable business, Furukawa Electric plans to form a joint venture with CommScope, Inc. in the U.S.A. which is rapidly growing in the cable business such as coaxial cables for cable TV, thereby jointly administering the business. The company’s worldwide marketing power and managing knowhow in North America are of great expectations.
As for specialty fiber for DWDM, there will be a separate company with 100 % self-governing management. Advanced management system may probably be promoted there, taking IPO (initial public offering) into consideration in future so as to enhance employees’ incentives.
