Credo Technology Group Holding Ltd (NASDAQ:CRDO) shares are trading higher Tuesday after the company announced it will acquire DustPhotonics.

Acquisition Details

Credo said it has entered into a definitive agreement to acquire DustPhotonics, a developer of silicon photonics photonic integrated circuit technology for optical transceivers. 

The company said the acquisition will expand its optical interconnect portfolio and position it with a vertically integrated connectivity stack spanning SerDes, digital signal processing, silicon photonics and system integration. 

Strategic Rationale

Credo said the transaction accelerates its optical interconnect roadmap and expands its addressable market in the global optical industry. DustPhotonics' SiPho PIC technology integrates key optical functions onto a single chip, reducing complexity, improving manufacturing yields and lowering costs at scale. 

The technology is used in transceivers deployed in hyperscale AI clusters and is being designed for near port optics and co-packaged optics applications. 

Credo said bringing the technology in-house is expected to reduce supply dependencies, accelerate product development and improve cost structure at volume. 

Growth Expectations

The company said it expects its combined portfolio of optical products to generate more than $500 million in optical revenue in fiscal 2027, driven by expanding adoption across hyperscale AI deployments. 

Transaction Terms

Under the agreement, Credo will acquire DustPhotonics for $750 million in cash and approximately 0.92 million shares of Credo common stock, with potential additional contingent consideration of up to approximately 3.21 million shares based on certain financial milestones. 

The company expects the transaction to be accretive to non-GAAP earnings per share in fiscal 2027 and said the deal is expected to close in the second quarter of calendar 2026, subject to customary conditions and regulatory approvals. 

Credo Shares Rise

CRDO Price Action: At the time of writing, Credo shares are trading 17.59% higher at $158.00, according to data from Benzinga Pro.

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