05 Jul 2017
Strategic purchase will strengthen portfolio and expand Adva’s “customer footprint”.
Consolidation of optical communications systems and components developers has been a regular feature of the industry for several years, whether like-buying-like or large players seeking to become more vertically integrated. Examples include: II-VI acquiring Integrated Photonics for $45 million; IDT buying GigPeak ; Macom buying Applied Micro for $770m; Infinera buying Transmode; and the €15.6bn Nokia-Alcatel-Lucent deal.
Terms
Adva is to make a tender offer of $10.00 per share for all the outstanding common stock of the California-based MRVC. The offer, if carried through, would equate to an aggregate purchase price of $69 million and has been approved and unanimously recommended by the boards of directors of both companies.
The acquisition is subject to customary closing conditions, including the tender of at least a majority of MRVC’s outstanding shares of common stock. The acquisition would strengthen Adva’s portfolio of optical, communications systms and expand its customer base, especially in non–European regions.
In 2016, MRVC reported revenues of $80.3 million and for the quarter ending March 31, 2017, revenues of $21.2 million, cash and cash equivalents of USD 21.7 million and listed no debt. However, considering its broader trading figures over the five year period 2012-2016, while MRVC’s annual revenues have consistently remained at between $80-90 million, annual operating losses have averaged almost negative $10 million – as has annual net income (see table, below).
Combined compelling skill set
Brian Protiva, CEO, at Adva, commented, “MRV Communications is a company that shares many of our values. Over 29 years, it has driven some key innovations and played an important role in shaping our industry. Our combined teams will present the marketplace with an incredibly compelling skill set and technology base.”
Adva’s acquisition of MRVC be the second significant acquisition it has made in as many years. In 2016, the company successfully acquired Overture Networks to strengthen its Carrier Ethernet portfolio and create one of the industry’s most successful NFV product suites – Ensemble.
Uli Dopfer, CFO at Adva, commented, “The networking industry is experiencing one of the most exciting and tumultuous phases in its history. The pace of innovation has never been faster or more demanding. Our acquisition of MRVC will not only strengthens our cloud access portfolio, but it also opens the door to new customers. It will present many new business opportunities, especially for communication service providers who are seeking to explore the possibilities of virtualized network services.”
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