Finisar makes bid to acquire Ignis ASA

Finisar Corp. (NASDAQ: FNSR) hopes to build on its existing stake in Ignis ASA (OSE: IGNIS) to full ownership. The company has announced it will make a recommended voluntary public cash offer to acquire all of the outstanding shares of Ignis it doesn’t already possess. Finisar will offer NOK 8 per share, making the aggregate purchase price approximately NOK 425 million ($76 million).

Finisar Corp. (NASDAQ: FNSR) hopes to build on its existing stake in Ignis ASA (OSE: IGNIS) to full ownership. The company has announced it will make a recommended voluntary public cash offer to acquire all of the outstanding shares of Ignis it doesn’t already possess. Finisar will offer NOK 8 per share, making the aggregate purchase price approximately NOK 425 million ($76 million).

Another company also had made a play for Ignis but was rejected, Finisar asserts. The Ignis board of directors therefore has resolved to recommend its shareholders accept Finisar's bid.

Finisar says the offer price represents a premium of 58.4% over the closing share price of Ignis on March 21, 2011, the last trading day prior to Finisar's public announcement of its intention to make the offer, and a premium of 61.5% over the adjusted volume weighted average market price for the three-month period preceding the announcement.

Finisar says it increased its holdings in Ignis this week by an aggregate of 18.3 million Ignis shares from existing Ignis shareholders for the NOK 8 per share in cash, an aggregate investment of NOK 147 ($26 million). With these new shares, Finsar now owns approximately 32.6% of the outstanding Ignis shares on a fully diluted basis.

Ignis, headquartered in Oslo, Norway, leverages InP and planar Lightwave circuit expertise to produce arrayed waveguide gratings and splitters. Its SmartOptics business – which the company acquired this past December -- offers optical transceivers and WDM products. In April 2009, Ignis acquired Syntune, a Swedish startup that developed tunable lasers.

It’s the Syntune portion that appears to have caught Finsar’s eye.

"Ignis has developed many innovative new technologies and currently offers multiple industry leading products that are focused on attractive growth markets," said Finsar CEO Eitan Gertel. "This acquisition represents an extension of our vertical integration strategy. Ignis has developed, amongst other of its product technologies, a tunable laser that is integrated with a modulator and a semiconductor optical amplifier and that Finisar believes has the highest performance currently available in the market. The Ignis tunable laser will be used in Finisar's industry-leading 10-Gbps tunable 300-pin and tunable XFP product lines. Finisar estimates that the combined worldwide market for these products will be approximately USD $250 million in calendar 2011 and will grow to approximately USD $400 million in 2015."

The acquisition also will strengthen Finisar’s ability to offer new 40- and 100-Gbps products, Gertel said.

“Certain Ignis shareholders,” a group that includes all members of the company’s management and board owning shares, have committed to accept the offer subject to certain conditions. The shares this group controls represent approximately 19.7% of the outstanding shares of Ignis on a fully diluted basis. Combining these with Finisar’s current holdings would total approximately 52.3% of the outstanding shares of Ignis on a fully diluted basis. The completion of the offer will be subject to the satisfaction or waiver by Finisar of customary conditions, including acceptance of the offer by the holders of at least 67% of the outstanding Ignis shares on a fully diluted basis.

The transaction is not currently expected to require approval by competition or antitrust authorities in any jurisdiction. Finisar says the purchase will be funded from existing cash resources. Subject to the various closing conditions, the offer and resulting purchases are expected to close early in Finisar's first fiscal quarter ending July 31, 2011.

Ignis reported revenues of approximately NOK 68 million for its quarter ended December 31, 2010, or NOK 88 million on a pro forma basis, including the operations of SmartOptics. Finisar expects the acquisition to be dilutive to its non-GAAP earnings per share by approximately $0.02 per share in its first fiscal quarter ending July 31, 2011 but, subject to the achievement of anticipated synergies, to be accretive within one year following the closing.

Finisar also has agreed to provide Ignis with a bridge financing facility under which Ignis may borrow up to $3 million after April 15, 2011 for working capital purposes. Loans under the facility will bear interest at the rate of 5% per annum, will be secured by certain assets of Ignis and will be payable on December 31, 2011.

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