Corning has agreed to buy passive optical components maker Alliance Fiber Optic Products (AFOP) for about $305 million (€270 million).
Under the terms of the agreement, Corning has made an all-cash tender offer to acquire all of the outstanding common shares of AFOP for $18.50 per share, representing a 32 per cent premium to the one-month average closing price prior to the announcement and a 20 per cent premium to the closing price on April 7, 2016.
AFOP designs and manufactures high-performance passive optical components used by datacom and telecom OEMs (original equipment manufacturers) as well as cloud data centre operators. Corning already uses these components are used in several of its existing connectivity products, the company says.
“Combining AFOP’s components expertise with Corning’s broad portfolio of connectivity solutions further strengthens our position in the high-growth, cloud data centre market segment,” said Clark S. Kinlin, executive vice president, Corning Optical Communications. “And, it adds additional products that Corning can offer our broad customer base while providing an opportunity for manufacturing synergies.”
Corning expects the acquisition to expand its market access to cloud data centre operators and OEMs, broaden its presence in Asia, and provide product and cost synergies. The acquisition is expected to be accretive to its earnings per share during the first year.
The tender offer is expected to commence within the next 10 business days and will 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.
The boards of directors of both companies have approved the transaction, which is expected to be completed in the second quarter 2016. The completion of the tender offer is subject to customary closing conditions and regulatory review.
When the acquisition closes, Corning will integrate AFOP into its Optical Communications business segment.
AFOP, founded in 1995 and headquartered in Sunnyvale, California, has manufacturing and product development capabilities in the US, Taiwan and China.
