Increases Focus on Photonic Integration Solutions for High Speed 100G
and Beyond Networks
Company Updates Business Outlook for Fourth Quarter of 2016
SAN JOSE, Calif.--(BUSINESS WIRE)--Dec. 19, 2016-- NeoPhotonics (NYSE:
NPTN) (“NEOPHOTONICS” or the “Company”), a leading designer and manufacturer of
advanced hybrid photonic integrated optoelectronic modules and subsystems for
bandwidth-intensive, high-speed communications networks, today announced that
it executed a definitive agreement, to sell its Access and Low Speed
transceiver product lines (the “Low Speed Business”) to APAT Optoelectronics
Components Co., Ltd. (“APAT OE”) of Shenzhen, China, a designer and
manufacturer of optical sub-assemblies for telecom and datacom markets.
The assets to be sold include the intellectual property, inventory and
fixed assets for NeoPhotonics’ PON products including GPON and GEPON
transceiver products at up to 10G data rates, plus 10G and below telecom,
bidirectional and specialty transceiver products.
The transaction is valued at approximately $26.4 million, inclusive of
post-closing payments under a Transition Services Agreement. The transaction
value consists of an equivalent of $25.0 million purchase price plus an
additional equivalent of $1.4 million to be paid as certain transition services
are delivered. The consideration consists of not less than the equivalent of
$23.0 million to be paid in cash in China Renminbi at close and not more than
$2.0 million in a US dollar denominated promissory note. In addition, the
purchaser will assume outstanding supply chain purchase commitments and will be
responsible for payment of value-added tax obligations. The purchase price is
subject to adjustment after closing for inventory adjustments and by up to $10
million in the event of potential claims under transaction warranty commitments
of NeoPhotonics. The transaction is subject to customary closing conditions and
is expected to close in January 2017. The purchaser is further subject to a
$1.0 million breakup fee to be held in escrow, which will be applied to the
purchase price upon closing or forfeited if the transaction does not close due
to certain reasons attributable to the purchaser.
The secured promissory note of up to $2.0 million is for an initial term
of six months with an initial interest rate of 6.0% per annum. The note is
renewable at six month intervals with an increase in the interest rate by an
additional 4% per annum. The note will be secured by inventory and certain
fixed assets being purchased in the transaction.
In 2015, and for the first 9 months of 2016, the Low Speed Business
generated $92.8 million and $50.7 million in revenue, respectively, and gross
profit of $16.7 million and $9.7 million, respectively. Net assets for the
business were approximately $18.0 million as of September 30, 2016.
Commenting on the transaction, Tim Jenks, NeoPhotonics Chief Executive
Officer, stated, “After a comprehensive evaluation of the alternatives
available for the Low Speed Business, we believe this transaction will best
benefit our shareholders, customers, and employees. This transaction
underscores our objective to focus our efforts on growing high speed optical networking
products and solutions based on our advanced hybrid photonic integration
technology platform to meet customer demand.” Jenks continued, “We believe the
Low Speed Business will benefit from APAT OE's expertise in Access and PON
products while continuing to provide quality products, support and services to
customers.”
“We are excited to have the NeoPhotonics low speed product team join
APAT, and look forward to having more products to sell to our largest customers
as well as the opportunity this transaction creates for us to gain many new
customers,” commented Rex Gu, Founder and CEO of APAT OE.
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