Optics-based network connectivity solutions provider Lumentum has signed a definitive agreement to acquire Cloud Light Technology in a deal valued at $750m.

Hong Kong-based Cloud Light is engaged in designing, marketing, and manufacturing optical modules used in data centre interconnects and automotive sensors.

The acquisition is part of Lumentum’s plan to expand into the market for optical modules, which are used in cloud computing data centre facilities.

In addition, the deal is expected to bolster Lumentum’s capabilities to cater to the rising demand from networking and cloud customers.

Besides a broad product and technology portfolio, Cloud Light will add design and assembly, test, and packaging capabilities to Lumentum.

Lumentum noted that sales of 400G, high-speed transceivers, accounted for nearly all of Cloud Light’s more than $200m in revenue during the previous 12 months.

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In the most recent quarter, more than half of Cloud Light’s optical transceiver sales came from 800G modules.

Lumentum president and CEO Alan Lowe said: “With Cloud Light, we are making a strategic investment to significantly expand our opportunities in the cloud data centre and networking infrastructure space.

“Cloud Light provides us with the highest speed transceiver solutions at scale and complements our advanced component capabilities. This results in a broad product and technology portfolio that addresses a wide range of cloud operator needs.”

Cloud Light founder and CEO Dennis Tong said: “Having worked closely with the technology teams within leading cloud operators, we believe we can build upon our success to date and further accelerate cloud data centre growth by combining Lumentum’s advanced photonic integration and transmission technologies with our highly automated packaging and manufacturing processes.”

The boards of directors of both companies and the shareholders of Cloud Light have unanimously approved the deal.

The transaction is expected to close by the end of the 2023 calendar year, subject to receipt of regulatory approvals and other customary closing conditions.

Subject to obtaining regulatory clearances and meeting other closing requirements, the transaction is anticipated to close by the end of this year.