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Lucent Grabs Optical Device Supplier

Lucent Technologies Inc. made the latest play in the optical networking sector Monday by buying privately-held Herrmann Technology Inc. in a $438 million stock deal.

Lucent offered up approximately 7.3 million shares of common stock for all outstanding Hermann equity. Lucent will take an unspecified one-time charge to cover research and development costs connected to the deal. Also, Herrmann Technology shareholders may also receive an additional 675,000 shares, valued at approximately $40 million based on the closing price of Lucent stock on June 16, if the firm successfully meets goals based on performance.

In direct competition with Nortel Networks Corp. and Cisco Systems Inc., Lucent inked the deal to assert itself as a top provider of optical networking solutions in a market where is speedy content delivery is strongly desired.

By acquiring Herrman, Lucent will benefit from the company's thin-film process technology used to make passive optical filters, which are used in crafting dense wavelength division multiplexing (DWDM) optical networks. The networks enable connectivity providers to rapidly send large amounts of traffic over fiber-optic lines.

DWDM systems amp the capacity of optical fibers by combining and dividing different wavelengths of light, which enable multiple streams of voice, video and data to travel through a single fiber-optic cable. Thin-film filters prevent interference between different wavelength channels by filtering unwanted frequencies of light.

Herrmann Technology President Bill Herrmann will join the optoelectronics division of Lucent's Microelectronics Group as director of optical thin film filter manufacturing and advanced process development. Sixty-five employees will join Lucent's fold.

With Monday's deal, Lucent is picking up where it left off from last week's business developments when it said it was poised to spin off its microelectronics unit in a deal worth a reported $40 billion. The equipment giant also secured a $1.5 billion network infrastructure contract from Verizon Wireless, a new venture forged from the wireless businesses of Bell Atlantic and Vodafone AirTouch.