JDS Uniphase Breakup Plan Said to Follow Push by Investor

JDS Uniphase Corp.’s plan to separate into two publicly traded companies gained momentum following pressure by hedge fund Sandell Asset Management to split up, people with knowledge of the matter said.

The shares of JDS Uniphase climbed 10 percent to $13.36 at the close in New York, following the announcement that the company will separate into one unit building optical components and commercial lasers and another selling network-testing equipment. JDS Uniphase disclosed the split in a filing yesterday, and its market capitalization rose to $3.07 billion from $2.78 billion.

Sandell, which has built up a stake of about 2 percent in JDS Uniphase, had been pushing the company in recent months to split up, said the people, who asked not to be identified because the matter is private. The optical equipment business may attract buyers such as Avago Technologies Ltd. or Finisar Corp., they said.

Jim Monroe, a spokesman for JDS Uniphase, declined to comment on Sandell’s involvement in the company.

“This is a strategy our board has been actively considering for some time now and that’s what drove today’s announcement,” Monroe said.

The Milpitas, California-based company expects the transaction to be completed by the third quarter of 2015. JDS Uniphase said it will take a restructuring charge of $75 million to $100 million and the changes will achieve an expense reduction of $50 million.

Forecast Affirmed

“We believe two fundamentally focused companies best position us to stay ahead of the accelerating pace of technology change and to compete even more effectively across the unique markets we serve today,” Tom Waechter, JDS Uniphase’s chief executive officer, said in a statement.

JDS Uniphase reaffirmed its forecast for the fiscal first quarter ending in September for non-GAAP revenue of $405 million to $425 million and profit excluding items of 8 cents to 12 cents a share.

The shares of JDS Uniphase had declined 20 percent from a year earlier through yesterday.

JDS Uniphase was created in 1999 through the $7.05 billion merger of two companies, Uniphase Corp. and Canada’s JDS Fitel Inc., creating the biggest maker of components for the fiber-optic equipment used in telecommunications networks at the time.

The company then embarked on a series of acquisitions, including the $15.5 billion purchase of E-Tek Dynamics Inc. in 2000, and SDL Inc. for $41 billion that same year.

Asked whether JDS Uniphase would be split along similar lines at the time of its 1999 merger, Monroe said, “No, there’s been a lot of diversification of JDSU over the last 10 years or so.”

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