JDSU’s board 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 and a network and service enablement company (“NSE”) consisting of JDSU’s current Network Enablement, Service Enablement and Optical Security and Performance Products (OSP) segments.
JDSU said it expects the split to be finalized by the third quarter of 2015 and expects combined expense reduction of approximately $50 million. JDSU shares climbed 14% in after-hours trading Wednesday, according to MarketWatch.
According to a statement by JDSU, the stand-alone companies will gain greater strategic flexibility to address rapidly changing market dynamics. The separation is expected to occur through a tax-free pro rata spinoff of CCOP to JDSU shareholders.
Alan Lowe, CCOP’s president since 2008 and executive vice president of JDSU, is the CEO-designate of the CCOP stand-alone company, while Tom Waechter, JDSU’s president and CEO, will continue in his role with the stand-alone NSE company.
The stand-alone NSE will be a provider of instruments, software and services with its Service Enablement business to be focused on software solutions that support the industry’s transition to SDN. Meanwhile, the stand-alone CCOP will be providing 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.
“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. 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. 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 growth markets. The board and I believe Alan is the right executive to lead this new company. 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 greater success.”
– Tom Waechter, JDSU president and CEO