Overview

• Lumentum Holdings has agreed to acquire Hong Kong-based Cloud Light Technology for $750 million, a strategic investment that is expected to considerably expand the company's opportunities in the cloud data center and networking infrastructure space.
• The deal with Cloud Light, a producer of fiber optic equipment and automotive sensors, is projected to be immediately accretive to Lumentum's earnings per share and more than double its cloud intra-data center infrastructure revenue within 12 months after the close of the transaction.
• Cloud Light, which was spun off from Japanese electronics maker TDK in 2018, reportedly generated about $200 million in revenue over the last year.
• Lumentum plans to finance the acquisition through its existing cash balance, with payment to be made in cash along with the assumption and substitution of outstanding unvested Cloud Light options.
• The acquisition comes as companies like Amazon, Microsoft, and Google rush to adapt their vast data centers for an era where AI-backed services such as chatbots are drawing numerous users, highlighting the enduring demand for cloud-computing platforms across the sector.