NeoPhotonics closes LAPIS Semiconductor Optical Business Unit acquisition

NeoPhotonics Corp. (NYSE: NPTN) has closed its acquisition of the semiconductor optical components business unit (OCU) of LAPIS Semiconductor Co., Ltd. The company had announced its intent to acquire OCU, which makes high-speed lasers and III-V amplifiers, this past January (see “NeoPhotonics to buy semiconductor optical business of LAPIS Semiconductor”). The new assets were merged into NeoPhotonics Semiconductor GK, a Japanese subsidiary of NeoPhotonics.

The acquisition cost NeoPhotonics $10.2 million in cash, after adjustments, plus approximately $3.7 million in cash as the first of four equal payments for the associated real estate. NeoPhotonics also assumed employee retirement obligations of approximately $6.5 million and compensation obligations of approximately $0.6 million. The total consideration for the real estate including the payment made upon the closing is approximately $14.6 million with the balance payable over the next three years. Including the future payments for real estate, the total purchase price is approximately $35.2 million.

The OCU originally was the component division of OKI Electric before ROHM Semiconductor bought it in 2008. NeoPhotonics management sees the acquisition as strengthening its play in 100-Gbps technology, providing entry to the high-speed semiconductor market, as well as expanding its materials portfolio with an eye toward new photonic integrated circuit (PIC) based products.

“We are pleased to have closed the previously announced acquisition of the optical components unit of LAPIS Semiconductor in accordance with our purchase agreement and earlier than planned,” said Tim Jenks, chairman and CEO of NeoPhotonics. “We look forward to this expansion of our 100G product suite, our further strategic expansion into the Japan market, the addition of new global network equipment and module customers, and expanding our business opportunities with our current mutual customers.”

Based on preliminary unaudited pro forma financial information from LAPIS Semiconductor, the former OCU had revenue of approximately $45 million for the first nine months ended September 30, 2012. NeoPhotonics estimates the new assets will be accretive to the company’s adjusted EBITDA within the first year.

NeoPhotonics entered into a syndicated revolving credit and term loan agreement with Comerica Bank, as administrative agent and lead arranger. East West Bank has also become a lender under this facility. NeoPhotonics borrowed $28 million under the term loan facility and $12 million under the revolving credit facility to refinance existing company debt of approximately $20.9 million and help finance the acquisition and related transaction expenses.

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