Avanex, Oplink in $303 Million Merger
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The consolidation in the telecommunications sector has hit a new gear with fiber optics networking firms Avanex Corp. and Oplink Corp. announcing a $303 million all-stock merger.
Under terms of the deal, Oplink shareholders would receive 0.405344 of a share of Avanex common stock in exchange for each share of Oplink common stock. After the merger, which is scheduled to close by June 30,2002, shareholders of the Avanex and Oplink would each own 50 percent of the combined entity.
Avanex, the Fremont, Calif.-based firm that provides optical communications components called photonic processors, said the transaction is aimed at providing "immediate opportunities for cost reductions while also providing potential for incremental sales."
Oplink, which maintains headquarters in San Jose, Calif. and facilities in China, sells products that enable service providers and optical system manufacturers to provide bandwidth to support the increase of data traffic on the Internet. The company's products are targeted to telecommunications equipment providers worldwide.
Fred Fromm, president and CEO of Oplink, will act as an advisor to the company through the transition period and serve on the board of directors, which would comprise of nine members: four current Avanex directors, including Avanex's CEO; four current Oplink directors, including Oplink's Chairman and current CEO; and a ninth independent to be elected by the board of the new company.
The two sides expect the merger would generate net cost savings of approximately $15 million in the first full year following completion of the transaction.
UBS Warburg LLC served as financial advisor to Avanex while Credit Suisse First Boston Corporation represented Oplink.