In a strategic move aimed at expanding its presence in the cloud data center and networking infrastructure domain, Lumentum Holdings (NASDAQ:LITE) has announced the acquisition of Cloud Light Technology for approximately $750 million. The announcement on Monday led to a 14% surge in Lumentum's stock, closing at $41.01, which mitigated the 22% decline experienced earlier this year.
Both companies' boards and Cloud Light's shareholders have approved the deal, which will be compensated via cash and outstanding unvested Cloud Light options. The acquisition is expected to be immediately accretive and double Lumentum's cloud intra-data center infrastructure revenue within a year post-deal.
CEO Alan Lowe expressed optimism about the acquisition, viewing it as an opportunity for growth in a key sector. The transaction is slated for closure by the end of 2023.
InvestingPro Insights
In light of Lumentum's recent announcement, a few key insights from InvestingPro can provide additional context. According to InvestingPro's data, Lumentum (LITE) has a market cap of $2700M USD and a negative P/E ratio of -20.90, indicating that the company has been operating at a loss. Over the last quarter of 2023, the company experienced a revenue growth of 3.18%, despite a quarterly revenue decline of -12.15%.
InvestingPro Tips suggest a mixed outlook for Lumentum. On one hand, management has been aggressively buying back shares, indicating confidence in the company's future. Additionally, liquid assets exceed short-term obligations, providing the company with a safety net. On the other hand, the stock has fared poorly over the last month, with a significant price drop over the last year. Analysts are also predicting a sales decline for the current year.
For more detailed insights and additional tips, consider subscribing to InvestingPro. With over 13 tips available for Lumentum alone, InvestingPro provides a wealth of data to inform your investment decisions. Check out their affordable pricing options here.
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