Newport acquires Spectra-Physics, bolsters presence in military and homeland security applications

By John Keller

IRVINE, Calif. — Newport Corp.'s acquisition of the Spectra-Physics division of Thermo Electron in Mountain View, Calif., is expected to bolster Newport's resources and expertise in military, homeland security, graphics, lasers, and astronomical applications, company officials say.

Newport, based in Irvine, specializes in laser and photonic products and systems for semiconductor, communications, life sciences, and research applications. The company reports 2003 sales of $134.8 million.

"Newport and Spectra both sell into the defense industry to applications involving filters and sensors that get used by the Northrops, the Raytheons, Boeing, etc.," says David Rossi, Newport's director of marketing. "Bringing into the fold high-power diode lasers as well as gas lasers, diffraction gratings, white-light sources, and spectrometers will complement Newport's offerings into that same market."

Newport's core products include laser-diode testing, fiber-optics-test instruments. lasers and laser optics, optical-fiber and fiber-optic components, spectral analysis, lenses, mirrors, prisms, beamsplitters, motion control, and actuators.

Spectra-Physics brings to Newport an established sales base in the defense industry, with laser and photonics products for applications in targeting, rangefinding, and UV imaging. Spectra also provides products for homeland-security applications, such as baggage inspection, identification, and observation.

Spectra also brings expertise in image recording, as well as in products that define or improve the performance of optical astronomy, components for telescopes and space-based laser tracking, and stellar-guidance systems.

"Now we bring a complete, integrated photonics solution to all our markets, and aerospace and defense is one of those," Rossi says. "Newport traditionally had expertise in vibration-control systems, motion systems, and high-performance optics, and now we bring the creation of the light to that mix — lasers, white-light sources, diffraction gratings, interference filters, and spectrometers to measure the light."

Rossi says the acquisition is "a complementary addition to Newport product offerings that we think we will allow our customers in the aerospace and defense markets to come to one supplier for a complete solution."

Newport leaders signed an agreement with Thermo Electron Corp., based in Waltham, Mass., to buy Spectra-Physics for $300 million — $200 million in cash, $50 million in Newport Corp. common stock, and a $50 million promissory note payable in 2009.

The acquisition is subject to regulatory approval and is expected to close this month. "We expect this transaction to create many new and expanded opportunities for Newport in markets for photonics, biophotonics, and nanotechnology," says Robert Deuster, Newport's chairman and CEO.

"While we anticipate that our total sales to microelectronics customers will almost double, the percentage of company sales to these markets will remain approximately one-third of our total sales," Deuster says.