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 for bandwidth-intensive, high-speed communications networks, is to acquire the semiconductor optical components business unit (OCU) of LAPIS Semiconductor Co Ltd (a subsidiary of ROHM Co Ltd). OCU is to be acquired by NeoPhotonics Semiconductor GK, a Japanese subsidiary of NeoPhotonics, for about $36.8m in cash (which is comprised of about $21.2m in cash before adjustments for the business unit and an additional $15.6m over three years for the associated real estate). Following completion of the transaction, NeoPhotonics intends to combine and operate the business as NeoPhotonics Semiconductor GK at its current location near Tokyo, Japan.
NeoPhotonics says that the acquisition is intended to further accelerate the development of its PIC technology by coupling complex optical devices and analog semiconductor ICs within the same platform. In addition, NeoPhotonics’ technology portfolio will expand to include high-speed semiconductor devices for signal generation and amplification. The acquisition agreements provide for the purchase of the LAPIS Semiconductor OCU business, together with a portfolio of more than 150 patents and patent applications, its campus and high speed semiconductor and laser and detector fabrication facility.
“LAPIS Semiconductor OCU provides a broad range of lasers, drivers, and detectors for high-speed 100G applications. We believe the company’s technologies are well suited for data rates in optical networks beyond 100G as well. We also believe this acquisition can enhance our ability to provide customers with innovative and technologically advanced optical communication products, which can benefit our customers as they strive to accelerate the delivery of scalable high speed and high bandwidth connectivity,” says NeoPhotonics’ chairman and CEO Tim Jenks.
As the OCU business unit was not a standalone company, audited financial information is not yet available. Based on preliminary unaudited pro forma financial information provided by LAPIS’ management, OCU had revenue of about $45m for the first nine months to end-September 2012. For the same period, about 30% of revenue attributable to OCU was from network equipment manufacturers that are also customers of NeoPhotonics, approximately 6% of revenue attributable to OCU was from NeoPhotonics, and the remainder attributable to OCU was from other optical module manufacturers and test and measurement customers. Based on company estimates, the addition of OCU is expected to be accretive to NeoPhotonics’ adjusted EBITDA within the first year following the transaction. Following the consummation of the sale transaction, NeoPhotonics will file with the US Securities and Exchange Commission (SEC) the required historical and pro forma financial results reflecting the acquisition.
“The transaction is a natural step in the relationship between NeoPhotonics and LAPIS Semiconductor OCU, as the businesses have been collaborating closely on high speed coherent technology development for the past four years. Further we plan to leverage our existing sales channels after the acquisition, as the two businesses serve many common customers. The transaction will provide NeoPhotonics with revenue from OCU’s advanced lasers and drivers used in many of today’s 100G client-side data transmission modules,” added Jenks.
The board of directors of each company has approved the transaction. The parties expect the transaction to close in the second quarter, subject to closing conditions.
