Finisar to acquire RED-C Optical Networks, primarily for amplification technologies

Sunnyvale, CA--Fiber-optic subsystems and components manufacturer Finisar Corporation (NASDAQ: FNSR) entered into an agreement to acquire all of the outstanding equity interests in RED-C Optical Networks, a Delaware corporation, with subsidiary operations in Tel Aviv, Israel. The acquisition will broaden Finisar's product lines primarily for telecom applications by adding key amplification technologies, including erbium-doped fiber amplifier (EDFA) technology, Raman amplification, and dynamic hybrid amplification. These technologies are considered critical for reconfigurable optical add-drop multiplexer (ROADM) line cards and are increasingly important in cost-effectively extending the reach of transceivers and transponders especially for 100 Gbps and 40 Gbps coherent transmission, ultra-long repeaterless links, and low-latency networks.

"RED-C has been an innovator in optical amplification, which we view as an increasingly critical technology as networks get faster and more complex," said Eitan Gertel, Finisar's CEO. "As we have further penetrated the line card market with our differentiated WSS [wavelength selective switch] technology, we see this acquisition as a tremendous opportunity to further innovate for our customers and advance our vertical integration strategy."

"We expect RED-C's high performance EDFAs and Raman amplifiers, currently deployed in optical networks around the globe, to continue to deliver strong growth for the RED-C business," said John Clark, Finisar's Executive Vice President, Technology and Global R&D. "Going forward, we anticipate additional growth opportunities for the novel Hybrid Raman EDFA platform. The continuing rapid growth in global bandwidth demand is driving a major transition to coherent transmission and mesh topologies for optical networks. These new networks can deliver lower cost per bit and improved resilience, but are expected to require advanced optical amplification technologies to deliver optimum performance. RED-C's Hybrid amplifier products, based on RED-C's core underlying IP, are unique in providing improved performance versus standalone EDFA and Raman optical amplifiers. We expect RED-C's Hybrid optical amplification platform to replace standard EDFAs for next-generation LH [long haul] and ULH [ultralong haul] optical networks. Finisar is pleased to be joining with RED-C to deliver this next wave of optical amplifier technology."

The acquisition will be effected by the merger of RED-C with a wholly owned subsidiary of Finisar. In connection with the acquisition, Finisar will pay in cash approximately $23.7 million in initial consideration for all of RED-C's outstanding equity. As of March 31, 2012, RED-C had $3.2 million of cash and no debt. Finisar will also pay to stockholders and certain RED-C employees up to an additional aggregate of $20 million payable in cash or in shares of Finisar common stock at Finisar's option, subject to the achievement of financial performance targets related to RED-C products and technologies during calendar 2013 and continued employment with Finisar.

Founded in 2000, RED-C has over 140 subsidiary employees, all of whom are located in Israel. Following the acquisition, the RED-C business will operate as a subsidiary of Finisar, with principal operations continuing at its current facility in Israel. Finisar expects the acquisition of RED-C to be slightly positive to non-GAAP earnings per share in its fiscal year ending April 30, 2013. The acquisition is expected to be completed prior to July 31, 2012, subject to certain closing conditions.

SOURCE: Finisar; http://investor.finisar.com/releaseDetail.cfm?ReleaseID=688665