NeoPhotonics Corp of San Jose, CA, a vertically integrated designer and manufacturer of photonic integrated circuit (PIC)-based modules and subsystems for bandwidth-intensive, high-speed communications networks, has completed the acquisition of privately held firm Santur Corp of Fremont, CA, USA.

Founded in November 2000, Santur is a vertically integrated designer and manufacturer focused on commercializing indium phosphide (InP) PIC-based tunable laser array and packaging technologies for communications applications. Its technology includes established telecom designs offering approaches to wide tunability as well as high-speed transceivers. Products are designed to provide reduced size, power consumption and cost for a wide range of DWDM, coherent line-side and client-side networking applications in 10G, 40G and 100G networks. Santur generated revenue of about $21m for the six months to end-June 2011.

NeoPhotonics agreed to pay an estimated $39.2m in cash for Santur, after deductions for closing costs and other adjustments, plus up to $7.5m extra contingent on the financial performance of Santur products subsequent to closing of the transaction through the end of 2012.

“By combining active InP PICs from Santur with our hybrid PICs, we can provide our customers with new products for 100G coherent systems that feature higher levels of integration, higher performance and greater functionality," says NeoPhotonics' chairman & CEO Tim Jenks.

In connection with the acquisition of Santur, special inducement grants (under the NeoPhotonics 2011 Inducement Award Plan) are being granted to retain certain Santur staff (118 in total) as employees of the NeoPhotonics group. The firm has granted an aggregate of 466,450 stock options, each of which vests 25% on the first anniversary of the closing of the acquisition and the remainder in 36 substantially equal monthly installments thereafter, subject to such employees being employed by the NeoPhotonics group on the vesting dates. The stock options were granted effective upon the acquisition closing date, have a 10 year term and an exercise price equal to $5.97 per share (the closing price of NeoPhotonics common stock on the New York Stock Exchange on the date of grant). The stock options were approved by the Compensation Committee of NeoPhotonics’ board of directors and were granted as a material inducement to employment with the NeoPhotonics group.