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Fujikura buys Nistica as the WSS market heats up

16 May 2012
 
Fujikura Ltd. has signed a definitive agreement to acquire privately held Nistica, a wavelength-selective switch (WSS) developer, for an undisclosed sum.
Nistica produces WSS devices aimed at the metro market. The start-up uses DLP technology from Texas Instruments, which enables it to offer devices with flexible channel spacing – a feature that is increasingly viewed as a “must have” for next-generation ROADM systems (see Vendors unveil components for next-gen ROADMs).
 
As one of the few standalone vendors in the WSS market, Nistica had become an attractive take-over target. But it made sense for Nistica to throw in its lot with Fujikura, a company that it knows well, both as an investor and as the manufacturer of its products in Vietnam.
 
“Fujikura has been a strategic partner of Nistica and an investor in Nistica since 2007," said Noboru Sugiyama, senior vice president and member of the board of Fujikura. “The steady growth in high-volume delivery of wavelength selective switches and the transparent working relationship between our teams convinced us that acquiring Nistica’s talent was the logical next step in our partnership.”
 
The deal could indicate that Fujikura has greater ambitions for its optical components division, which has been a relatively small part of the business up until now. Fujikura recorded revenues of over $1bn for fiscal year 2011, but only $32m came from optical components (mostly from sales of dispersion compensators and optical transceivers), according to Ovum senior analyst Daryl Inniss.
 
“Although the acquisition of Nistica does not provide a clear fit with its historic business, we speculate Fujikura sees the importance of wavelength management and has decided it wants to play a significant role in this market. As such, it must develop Nistica into a mainstream supplier,” he wrote in a research note.
 
Another Japanese company, NTT Electronics Ltd (NEL) entered into a strategic investment with Nistica in 2010.  According to the announcement, NEL will retain its shareholding.
 
Components vendor Finisar also became a strategic partner to Nistica in 2008 with a distribution agreement covering Europe, China and North America (Fujikura has distribution rights in Japan).  Jerry Rawls, Finisar’s CEO, told Lightwave magazine that his company had been interested in buying Nistica, but the start-up wasn’t for sale at that time.  Finisar’s name didn’t feature in the announcement, so it is not clear if the company will continue as a partner.
 
Other investors in Nistica include Battelle Ventures, Novitas Capital, Technology Venture Partners, MMV Financial, and Mizuho Capital, as well as notable industrial individuals Bill Cadogan and Kal Shastri. The start-up had raised $31 million since it was founded in 2005.
 
The acquisition is expected to close in the next few weeks, subject to the customary closing condition.  Nistica will operate as a subsidiary of Fujikura.
 
By Pauline Rigby