In a move that caught industry analysts off guard, German optical disc replication tool maker Singulus Technology signed a contract with Swiss company Oerlikon for the acquisition of its Blu-ray disc equipment operations, further strengthening Singulus’ market lead in this segment.

Singulus takes over the entire Blu-ray activities as well as the servicing of the Blu-ray disc production lines already delivered by Oerlikon so far. Besides the production machines, Singulus will acquire all important optical disc patents and licenses as well as Oerlikon’s customer base. Oerlikon has announced that it will discontinue its CD and DVD production line operations.

The parties have agreed to keep the purchase price for the transaction confidential, but CEO Stefan Baustert told Reuters the acquisition "was low-priced in our eyes. And it was done in such a way that it was especially easy on our cash-position.”

Recent declarations by Oerlikon hardly suggested the company was to exit the BD replication tool market. Hans Ebinger, Head of Optical Disc at Oerlikon, commenting on the strategic cooperation with Sony DADC, was quoted in the Media-tech newsletter as saying: "The current market development confirms our Oerlikon Optical Disc strategy. We have focused on Blu-ray as the next generation format from the beginning. The excellent cooperation with Sony DADC regarding the BD50 wet embossing process allowed Oerlikon already to ship the first BD50 lines to key customers in December 2007."

“The decision of the major US film studios [Warner] in favour of the Blu ray format as the future video standard will result in increasing demand for our machines over the next couple of years. Singulus will substantially benefit from this trend,” commented Baustert.

While supplying HD DVD pressing tools as well, the company makes a gross margin of 'significantly' more than 30% from Blu-ray machines and it aims to command a 65% share of the global market, Baustert said in an interview with Boersen-Zeitung last month. The purchase is now likely to allow Singulus to command a market share of 75 percent worldwide, Blaustert said.

Singulus has sold eight Blu-ray replication machines so far. "The probability of us delivering more Blu-ray machines 2008 than the 15 originally planned has clearly increased," Blaustert told German weekly Euro am Sonntag. Analysts' estimates for €23 million in sales from Blu-ray related products in 2008 and for €57 million in 2009 are "absolutely realistic," Baustert said in the German newspaper.

Story filed 03.02.08