News

22 April 2009

 

Ignis agrees acquisition of Syntune

After signing a non-binding letter of intent early this month, the board of Ignis ASA of Oslo, Norway, which makes passive optical components for fiber-to-the-home (FTTH) infrastructure, has approved the acquisition of Indium phosphide-based tunable laser manufacturer Syntune AB of Kista (near Stockholm), Sweden.

Syntune’s founders and investors InnovationsKapital, Teknoinvest and Vision Capital will receive 8.05 million Ignis shares (worth about $4.6m in total). The deal is subject to approval by an ordinary general meeting of Ignis shareholders (brought forward from 20 May to 15 May).

Prior to the acquisition, Syntune will raise SEK25m (Swedish Krone) through an equity issue directed at the current owners. The firm’s current interest bearing debt amounts to about SEK41.8m (mainly a €4m venture lease and loan facility entered into with Kreos Capital in 2008). So, Ignis will assume net interest bearing debt of SEK16.8m. However, the deal includes Syntune securing an additional loan facility of SEK25m (€2.3m) from Kreos Capital III, so that its cash position is sufficient to fund its activities until break-even in 2010.

Syntune was founded in January 2003, when it acquired an exclusive worldwide license to a patent on the ‘modulated grating Y-branch’ (MG-Y) tunable laser design, jointly owned by Leuven-based IMEC and Ghent University in Belgium and UK-based Gayton Photonics Ltd. MG-Y technology was developed as part of the EU-funded project NEWTON (New Widely Tunable Lasers for Optical Networks), in which Stockholm-based tunable laser manufacturer Altitun/ADC was a partner. Syntune's founders had previously helped to establish Altitun (sold to ADC in 2000 for $872m).

The MG-Y design provides a wide tuning range, high output power, a high side-mode suppression ratio, low power consumption, and fast tuning. Syntune’s indium phosphide-based technology platform provides single-chip tunable lasers and transmitters that are claimed to be the industry’s smallest and lowest cost, for applications from sensor systems to fiber-optic communications. The technology is Telcordia certified. Syntune completed the qualification of its first generation of products in 2007. 

In 2008, Syntune established a chip packaging supplier relationship with CyOptics Inc of Breinigsville, PA, USA (which specializes in indium phosphide optical chip and component technologies). That April it acquired a majority stake in Svedice AB of nearby Järfälla, Sweden, which provides InP-based wafer foundry services. Syntune had previously partnered with Svedice to fabricate its products, including what was claimed to be the first commercially available, widely tunable transmitter on a single chip.

The tunable laser market is still in an early commercial phase but is growing fast, says Ignis. The ramp-up of Syntune’s revenue began at the end of 2007, and shipments grew five-fold from first-quarter to fourth quarter 2008. For full-year 2008, product sales amounted to SEK18m. Including subsidiary Svedice, Syntune now has 40 staff. In 2009, Syntune is expected to grow with the tunable laser market, as well as through the qualification and launch of new products, and through broader market reach via the Ignis distribution network.

The acquisition means that Ignis’ existing portfolio of passive components will be supplemented by Syntune’s active components (specifically, tunable laser technology), offering a broader range of optical components to network operators. In particular, tunability is becoming one of the most critical elements of the optical industry, as wavelength agility offers increased flexibility and cost reductions in metro and long-haul, as well as in the access networks that Ignis currently supports. Syntune gives Ignis access to technologies and expertise that will be crucial to compete in future integrated optics markets, says Ignis ASA’s CEO Thomas Ramm.

Syntune’s CEO Patrik Evaldsson reckons that, as a subsidiary, Syntune will benefit from Ignis’ geographically broader sales and distribution structure. Also, the combination of the firms' technology platforms should create highly cost-efficient products for high-bandwidth networks such as passive optical networks using wavelength division multiplexing (WDM-PON), he adds.

Last September, Syntune announced its participation in GigaWaM, a three-year project running from April 2008 until March 2011 funded by a €3m ($3.8m) grant from the European Commission (EC) to develop Gigabit access WDM-PON for fiber-to-the-home (FTTH), enabling high-bandwidth services including high-definition TV and video on demand. A major goal is to provide a lower cost per user for Gigabit PON (GPON) systems, while increasing the bandwidth per user by more than a factor of ten through developing low-cost application-specific optical components with a high level of integration and improved manufacturing processes. Currently, even the cheapest WDM PON solution costs two to three times as much as GPON.

The GigaWaM project was initiated by Ignis' subsidiary Ignis Photonyx A/S of Birkerød, Denmark, which makes silica-on-silicon and polymer-based optical components including switches and arrayed waveguides (AWGs), and is led technically by the subsidiary’s photonic lightwave circuit (PLC) fab.

*Ignis’ acquisition of Syntune was preceded by settlement of the complaint filed last November with the US International Trade Commission (ITC) by JDS Uniphase Corp of Milpitas, CA, USA against both Syntune and CyOptics (which integrates chips from Syntune into products) as well as optical component and module maker Bookham Inc of San Jose, CA, USA. The lawsuit alleged infringement of JDSU’s tunable laser patents, and sought to ban the rival firms' tunable laser products. Bookham has already settled separately out of court by paying JDSU $3m plus up to $5m in royalties in exchange for a license to the patents.

JDSU had also sued Syntune separately last July in the US District Court for the Northern District of California. This case has now also been dismissed as a result the out-of-court settlement, which follows Syntune redesigning its tunable laser.

See related item:

Ignis signs letter of intent to acquire Syntune

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