Fiberxon: IPO could have been years away

Jan. 29, 2007
JANUARY 29, 2007 By Stephen Hardy -- Looking for an exit strategy, the board at Fiberxon had concluded that the company was one or two years away from being ready for an IPO. Thus, Fiberxon had been in talks with several companies before it agreed to be acquired by MRV.

JANUARY 29, 2007 By Stephen Hardy -- Looking for an exit strategy, the board at Fiberxon (search for Fiberxon) had concluded that the company was one or two years away from being ready for an IPO. Thus, Fiberxon had been in talks with several companies before it agreed to be acquired by MRV (search for MRV) as part of a plan to spin out LuminentOIC (search for LuminentOIC) as a publicly traded company, according to a company executive.

In an interview Friday afternoon at the Fiber Optic Expo in Tokyo shortly before the acquisition announcement, Fiberxon COO Jack Lu said that the company's board had been examining multiple exit strategies. While company president and CEO Li Hsu had been eyeing a public offering as early as the end of 2004 (see his statements here), the board had decided that an IPO in the short term wasn't in the cards.

Based on Friday's announcement, the board concluded that MRV offered the best acquisition option. MRV will pay $131 million in cash and stock for Fiberxon, which will be folded into its LuminentOIC operations. LuminentOIC in turn will be spun out as the subject of an IPO, with the conclusion of the Fiberxon acquisition driving the timing. MRV expects the deal with Fiberxon to conclude during the first half of this year, putting the timing of an IPO either in the second half of 2007 or in 2008.

MRV says that Fiberxon's unaudited results for 2006 shows revenue of between $45 million and $48 million. Lu said that Fiberxon has had particular success in selling GEPON transceivers and BOSAs for ONTs and ONUs in Japan and also was doing well in Korea. The company has been working closely with GEPON chip vendor Teknovus; its devices have appeared on reference designs using Teknovus chips, including its newest Turbo 2.5-Gbit/sec devices.

Lu added that the company has "a good position" in GPON device sales for use in the United States and European markets. The company plans to showcase devices for GPON, WDM, and 4-Gbit/sec Fibre Channel at OFC/NFOEC in March.

MRV suggests that the LuminentOIC/Fiberxon combination will create one of the largest transceiver suppliers in the world, with a combined run rate of more than 2 million transceivers annually. The deal would also expand LuminentOIC's presence in Asia, which had been part of impetus for MRV's aborted deal with HG Genuine.

Meanwhile, Lu confirmed that Fiberxon's vice president of finance has resigned "for personal reasons." However, he did not comment on speculation that the executive had engaged in improper conduct. An Internet search failed to uncover any mention of the resignation, or the reason behind it, in the Asian press. Lu said that the company has been working with Deloitte to comply with U.S. GAAP and that an audit was ongoing; he placed the audit in the context of establishing year-end results and/or preparing for acquisition.