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Infineon Breaks Sale Deal With Finisar

German chipmaker Infineon Technologies and fiber optic equipment maker Finisar are squabbling over a broken deal between the two companies.

Infineon said it has terminated its standing agreement to sell its fiber optics business to Finisar "due to circumstances beyond Infineon's control." The company blamed the problem on a delayed proxy statement it needed to file with the U.S. Securities and Exchange Commission.

"The significant delay and high uncertainty of closing are expected to result in deterioration of our fiber optics business and in potential harm to our customers," Infineon executives said in a statement.

But Infineon's notice also alleges, among other things, that the purported termination was based on Finisar's breach of the agreement.

That has Finisar executives on the defensive; they argue that no such breach took place.

"Finisar has repeatedly assured Infineon that it is prepared to fulfill its obligations under the agreement, including bringing the transaction to a vote of the Finisar stockholders whether or not the board's recommendation is modified or withdrawn," Finisar executives countered in a statement.

The executives said Finisar had advised Infineon that its board of directors was in the process of considering whether it could continue to recommend the transaction to Finisar's stockholders in light of a number of recent adverse developments in Infineon's fiber optics business.

Infineon said it is not looking around for another buyer at this time. Instead, the company said it is in the process of restructuring its Infineon fiber optics unit, which involves cutting approximately 1,200 jobs to save it.

Under the terms of the agreement, last amended in October, Finisar would have issued approximately 110 million shares of Finisar common stock to Infineon valued at approximately $206 million based on the value of its stock Tuesday.

Finisar said it is prepared to launch a legal defense against Infineon if it tries to seek damages.