OCTOBER 28, 2010 -- Optical module and subsystems vendor Source Photonics Inc. announced yesterday that it has been acquired by Francisco Partners, a technology-focused private equity fund.
The transaction is valued at approximately $146 million (including $113 million in cash, $33 million in assumed debt, and certain deductions set forth in the purchase agreement). Payment will be made in installments within 60 days of closing.
Source Photonics was created in August 2007 with the merger of LuminentOIC and Fiberxon, two subsidiaries of MRV Communications. MRV purchased Fiberxon, a Chinese-based Ethernet transceiver developer, the month before despite Fiberxon's inabiilty to complete a final audit. Source Photonics registered for an IPO at the beginning of 2008, but the IPO was never launched.
“This transaction illustrates our strategic shift away from fiber-optic components and our increased emphasis on providing optical networking products, services, and solutions,” MRV’s Chief Executive Officer, Dilip Singh, stated. “Moreover, this transaction will help stabilize revenue and operating income, allowing us to concentrate on maintaining steady cash flows from our core business units and growing the business to meet customer demand.
“After a comprehensive evaluation of the strategic alternatives available for Source Photonics, we believe this transaction is the best option to maximize long-term value for MRV shareholders,” Singh added. “Source Photonics will continue normal operations while benefiting from Francisco’s expertise in the technology and telecommunications industries. On behalf of MRV, I would like to thank all of the employees who contributed to the growth of Source Photonics and I wish them future success.”
“Source Photonics provides a powerful value proposition to its Tier 1 customers with its substantial China cost base, advanced technical capabilities, and high-growth business model. We believe Francisco Partners’ experience in the optical component space and in growing technology companies will help accelerate the next phase of Source’s growth, and we consider the investment a strong validation of our business strategy,” said Near Margalit, CEO of Source Photonics.
Said Keith Geeslin, a partner at Francisco Partners, “Francisco Partners has been engaged in the optical component space for many years and we are now pleased to announce our investment partnership with Source Photonics. We believe Source is a truly differentiated platform for growth and profitability in the optical component space and look forward to partnering with the management team to grow Source into one of the top global vendors for optical components.”
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