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17 July 2012
Finisar has announced it plans to acquire Red-C Optical Networks in a deal that could be worth up to US $43.7 million (€35.8 million). The acquisition will broaden Finisar's optical amplifier product range and strengthen the company's strategy to become more vertically integrated as it targets ROADM sub-systems.
Red-C's amplifier products include erbium-doped fiber amplification (EDFA), Raman amplification and dynamic hybrid amplification. These are key components that Finisar can add to its wavelength-selective switch (WSS) technologies to build ROADM line cards. The amplifiers are also important components for DWDM optical transmission, complementing Finisar's 40 and 100Gbps line-side optical module portfolio.
"This is a good acquisition for Finisar because demand for ROADM subsystems is growing," said Daryl Inniss, vice president and practice leader, components telecoms at Ovum. "And Red-C’s merchant amplifier business will become more competitive and gain opportunities from Finisar’s sales and marketing strength." 
According to Ovum, Finisar does not have its own pump laser, an important and expensive amplifier component. However, according to Inniss, there are sufficient merchant pump laser suppliers, and one of the independent vendors could become acquisition targets for Finisar, if needed. 
Under the terms of the agreement, Finisar will pay $23.7 million in cash for Red-C, which will become a wholly-owned subsidiary of Finisar. Finisar will pay up to an additional $20 million in cash or Finisar stock depending on certain targets being met during 2013.
Red-C was part of several Israeli optical start-ups founded during the optical boom of 1999-2000. The company has over 140 staff, all located in Israel. As of March 31, 2012, Red-C had $3.2 million in cash and no debt. 
By Roy Rubenstein