12 Apr 2016
Acquisition to support Corning’s plan for growth in cloud data center market.
Consolidation: Corning is buying AFOP for $305 million.
AFOP manufactures passive optical components, such as are used by cloud data-center operators and datacom and telecom OEMs. AFOP components are already used in several of Corning’s existing connectivity solutions. Founded in 1995 and headquartered in Sunnyvale, California, AFOP has manufacturing and product development capabilities in the US, Taiwan and China.
The offer price represents a 32% premium to the one month average closing price prior to the announcement and a 20% premium to the closing price on April 7, 2016. The tender offer is expected to commence by April 17, to be followed by a merger, in which all the shares of AFOP common stock that have not been tendered into the tender offer (other than shares for which appraisal rights have been properly exercised) will be converted into the right to receive $18.50 in cash per share.
Corning plans to integrate AFOP into its Optical Communications business segment. The company is expecting the acquisition to expand its market access to cloud data-center operators and OEMs, broaden its presence in Asia, and provide product and cost synergies. Corning expects the acquisition to be accretive to its earnings per share during the first year.
Clark Kinlin, executive VP, Corning Optical Communications, commented “Combining AFOP’s components expertise with Corning’s broad portfolio of connectivity solutions further strengthens our position in the high-growth, cloud data-center market segment. It adds additional products that Corning can offer to our broad customer base while providing an opportunity for manufacturing synergies.”
Peter Chang, AFOP founder and CEO, commented, “.Our board believes that this transaction is in the best interests of our stockholders and provides our stockholders with substantial cash value for their investment. In addition, we believe becoming part of a larger company with Corning’s strong track record benefits both our employees and customers.”
In February 2016, AFOP announced its financial results for 2015. Its revenues for the year ended December 31, 2015 were $81.2 million, a 6% decrease on the $86.0 million reported in 2014. Operating income for 2015 was $19.2 million ($21.6 million in 2014). The firm recorded a net profit for 2015 of $13.0 million ($14.5 million in 2014).
At that time, Peter Chang stated, "While we are pleased with the continued profitable financial performance for 2015, we are encouraged with the business prospects in this coming year  with the progress we have made with customers, new products, and the continued strong demand in the global fiber optics markets. In addition, we are encouraged by the prospects of continuous sequential quarterly growth, which would result in a year of record revenue and profits in the full year 2016."
Corning and OLED lighting specialist OLEDWorks, along with innovation facilitator NineSigma, have together launched an OLED lighting design open innovation contest. Potential contestants are challenged to “integrate thin, lightweight, and cool-to-the-touch OLEDWorks lighting panels into functional luminaires that are practical yet creative”.
The innovation contest is intended to: create designs that are functional, practical and can be manufactured; acquire creative designs that take advantage of unique OLEDWorks’ product attributes; identify innovative applications for OLEDWorks panels with a focus on retail, hospitality, residential, and medical lighting; and encourage designs that demonstrate a full lighting experience while offering utility and uniqueness.
All proposals must be submitted online at NineSights.com by June 30, 2016. Up to five winners will be announced in September and awarded $10,000 each. The contest is open to the public, including students, emerging professional designers, and professionals working at design studios and luminaire companies.
About the Author
Matthew Peach is a contributing editor to optics.org.