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board’s recommendation is modified or withdrawn,” Finisar executives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.
