NeoPhotonics to buy semiconductor optical business of LAPIS Semiconductor

NeoPhotonics Corp. (NYSE: NPTN) says it will accelerate the development of photonic integrated circuits (PICs) and applications through the acquisition of the semiconductor optical components business unit (OCU) of LAPIS Semiconductor Co., Ltd. The optical module and subsystems vendor says it has reached a definitive agreement for the acquisition, which will be conducted via NeoPhotonics Semiconductor GK, a Japanese subsidiary of NeoPhotonics. The indirect wholly owned subsidiary of NeoPhotonics will pay approximately $36.8 million in cash in the deal. Approximately $21.2 million of the total will be paid for the business before adjustments, while the remaining $15.6 million will be paid over three years for the associated real estate.

LAPIS Semiconductor is a wholly owned subsidiary of ROHM Co. Ltd.

The new assets will expand NeoPhotonics’ PIC expertise in coupling complex optical devices and analog semiconductor ICs within the same platform, the company says. NeoPhotonics also will be able to add high-speed semiconductor devices for signal generation and amplification to its product mix. The devices will enable advanced modulation methodologies, enhanced performance, and reduced power consumption, NeoPhotonics expects. OCU’s lasers and drivers already are used in 100G client-side data transmission modules, the company says.

The deal also includes more than 150 patents and patents applications and the OCU campus and high-speed semiconductor and laser and detector fabrication facility.

“We are excited about signing this definitive acquisition agreement as LAPIS Semiconductor OCU is a leading provider of high speed devices for communications,” said Tim Jenks, NeoPhotonics’ chairman and CEO. “LAPIS Semiconductor OCU provides a broad range of lasers, drivers, and detectors for high-speed 100G applications. We believe the company’s technologies are well-suited for data rates in optical networks beyond 100G as well. We also believe this acquisition can enhance our ability to provide customers with innovative and technologically advanced optical communication products, which can benefit our customers as they strive to accelerate the delivery of scalable high-speed and high-bandwidth connectivity.”

NeoPhotonics and LAPIS Semiconductor OCU have been collaborating on high-speed coherent technology development for the last four years, Jenks also revealed. NeoPhotonics plans to combine and operate the new assets business as NeoPhotonics Semiconductor GK in its current location near Tokyo.

Preliminary unaudited pro forma financial information the management of LAPIS Semiconductor has provided indicate OCU had revenue of approximately $45 million for the first nine months ended September 30, 2012. For the same period, approximately 30% of revenue attributable to OCU was from network equipment manufacturers that are also customers of NeoPhotonics, another approximately 6% of revenue came from NeoPhotonics, and the remainder derived from other optical module manufacturers and test and measurement customers.

NeoPhotonics estimates the addition of the OCU will be accretive to the company’s adjusted EBITDA within the first year following the transaction. The board of directors of each company has approved the deal, and the parties expect the transaction to close in the second quarter or sooner. Completion of the transaction is subject to various customary closing conditions.

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