MRV Communications entered into an agreement to sell Rome-based network integration subsidiary Tecnonet SpA to Milan-based Maticmind SpA for €19.7 million (about $21.4 million). The transaction is subject to customary closing conditions and regulatory approvals as well as MRV stockholder approval at a special meeting on or before November 30, 2015.
MRV hopes to close the deal during the fourth quarter of this year.
The all-cash transaction will see MRV receive payments from both Maticmind and Tecnonet. Maticmind will send €15.6 million ($17.3 million) to MRV at closing, while Tecnonet will chip in €4.1 million ($4.5 million) prior to closing to repay what MRV described as "an outstanding intercompany obligation." The purchase agreement allows MRV to seek and acquire third party debt financing for Tecnonet's payment, with Maticmind obligated to assume this debt at closing.
The sale is part of a strategy shift MRV announced in August 2012 (see "MRV to divest network integration business, focus on optical communications").
"The sale of the network integration business will enable us to focus all of our energy in support of our vision as an end-to-end packet and optical networking solutions provider," states MRV President and CEO Mark Bonney. "The timing of this transaction aligns well with our plans for the network equipment business as increasing bandwidth demand for cloud, mobility, and video services is accelerating market growth."
"This transaction is an important milestone for MRV," added Kenneth Traub, MRV's chairman. "We are very pleased to have an agreement now to sell our final network integration business at an attractive valuation. This transaction not only strengthens MRV's balance sheet, but also creates a more focused company with great growth potential with our new Network Equipment product line."
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