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29 March 2013

NeoPhotonics completes acquisition of LAPIS’ optical components business unit for $35.2m

NeoPhotonics Corp of San Jose, CA, USA, a vertically integrated designer and manufacturer of both indium phosphide (InP) and silica-on-silicon photonic integrated circuit (PIC)-based modules and subsystems, has completed its acquisition (announced on 22 January) of the optical components business unit (OCU) of LAPIS Semiconductor Co Ltd ahead of schedule.

OCU is a designer and manufacturer of lasers, laser drivers, photodiodes and amplifiers for high-speed networks, and was previously the component division of OKI Electric for high-speed lasers and III-V amplifiers before it was acquired by ROHM Semiconductor in 2008. The business now operates at its existing location near Tokyo as NeoPhotonics Semiconductor GK, a Japanese subsidiary of NeoPhotonics.

“We look forward to this expansion of our 100G product suite, our further strategic expansion into the Japan market, the addition of new global network equipment and module customers, and expanding our business opportunities with our current mutual customers,” says NeoPhotonics’ chairman & CEO Tim Jenks.

NeoPhotonics paid about $10.2m in cash for OCU, after adjustments, and about $3.7m in cash as the first of four equal payments for the associated real estate. NeoPhotonics has also assumed employee retirement obligations of about $6.5m and compensation obligations of $0.6m. The total consideration for the real estate (including the payment made upon the closing) is $14.6m, with the balance payable over the next three years. Including the future payments for real estate, the total purchase price is about $35.2m (paid in Japanese Yen).

On 21 March, NeoPhotonics entered into a syndicated revolving credit and term loan agreement with Comerica Bank, as administrative agent and lead arranger. East West Bank has also become a lender under this facility. NeoPhotonics borrowed $28m under the term loan facility and $12m under the revolving credit facility to refinance existing company indebtedness of about $20.9m and help to finance the OCU acquisition and related transaction expenses.  

Prior to the closing, the LAPIS Semiconductor OCU business unit was not a standalone company, so audited financial information for it is not yet available. Based on preliminary unaudited pro forma financial information provided by the management of LAPIS, OCU had revenue of about $45m for the first nine months of 2012 (to end-September). Based on company estimates, the addition of OCU is expected to be accretive to NeoPhotonics’ adjusted EBITDA within the first year following the transaction. Transaction-related expenses of $3-4m are expected to be incurred in first-quarter 2012.

The firm plans to provide an update on NeoPhotonics Semiconductor GK when it releases its financial results for Q1/ 2013, which is currently expected to be in the first half of May. It is also preparing the required historical and pro forma financial results reflecting the acquisition and plans to file the information with the US Securities and Exchange Commission (SEC) within the next 75 days (by 12 June).

See related items:

NeoPhotonics to acquire LAPIS semiconductor’s optical components business unit

Tags: NeoPhotonics PICs



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