Nortel to buy optical business

Telecommunications manufacturer Nortel Networks Corp. announced a definitive agreement on Tuesday to buy JDS Uniphase Corp.’s 980-nanometer pump-laser chip design (pictured left) and manufacturing subsidiary for up to US$3 billion in stock.

JDS Uniphase’s subsidiary, based in Zurich with related assets in Poughkeepsie, New York, produces chips that provide the energy source by which light is strengthened as it is transmitted on fiber between cities or buildings. The components are used to produce optical networks. Nortel said the purchase will help it integrate the technology and associated intellectual property into its optical amplifier modules, used to boost and amplify light in dense wave division multiplexing (DWDM) networks.

Based on Nortel’s Monday closing of $38.08, Nortel will issue approximately 65.7 million common shares on closing and up to approximately 13.1 million common shares in deferred consideration, the company said. The deferred consideration will only be paid to the extent that Nortel Networks does not meet its purchase commitments with JDS Uniphase by December 31, 2003.

The deferred stock in the deal is subject to a collar depending on the value of the stock when issued, at a minimum of approximately 10.9 million and a maximum of approximately 16.4 million Nortel Networks common shares, Nortel said.

JDS Uniphase, in San Jose, Calif. and Nepean, Ont., can be reached at Nortel, in Brampton, Ont., can be reached at