The optic component company gets stellar customers and expands its product line through the $23.5-million deal.
May 11, 2005

Chip maker CyOptics said Wednesday it completed its $23.5-million purchase of an optoelectronics division of TriQuint Semiconductor, a deal that gives the company more than 100 new customers and four times the number of employees.

CyOptics, which makes optical chips and components for building broadband equipment, also finished a new round of financing worth $24 million in equity and debt. The Lehigh Valley, Pennsylvania, startup has raised six rounds and a total of $103.5 million since its inception in 1999.

The company’s venture backers included Jerusalem Venture Partners, Sprout Group, TowerBrook Capital Partners (formerly Soros Private Equity Partners), and Eurofund.

Buying TriQuint’s optoelectronics operations will help CyOptics grow faster, said CEO Ed Coringrato. The company will get to work with TriQuint’s customers, including Lucent and Alcatel. TriQuint’s division was producing equipment for setting up optical networks while CyOptics developed components for building the equipment.

Mr. Coringrato declined to disclose the revenue of the combined company but said he expects CyOptics to make a profit for the first time by the end of this year. 

“Customers like one-stop shopping,” said Mr. Coringrato. The acquisition “allows CyOptics to increase its product offerings, production, and market share.”

TriQuint, based in Hillsboro, Oregon, sold its optoelectronics division after undergoing a restructuring. The public company decided to focus on developing products for cell phone makers, base stations, and defense contractors.

CyOptics bought the division with $23.5 million in cash, equity, and seller notes. The seller notes are money TriQuint loaned to CyOptics to finish the acquisition. Mr. Coringrato declined to specify the amount of financing from TriQuint.

The deal will give CyOptics new products, intellectual property, and offices and manufacturing plants in Breinigsville, Pennsylvania, and Matamoros, Mexico. The company also has decided to keep all 150 employees in Mexico and 90 of the 100 workers in Pennsylvania.

Before the purchase, CyOptics had 61 employees and wafer and chip plants in Pennsylvania and Israel.

The deal reflects a continuing trend of consolidation in the telecom industry, which began to experience a downturn around 2001, but has been recovering over the past two years.