Ignis and Gemfire join forces to establish integrated photonics company
NOVEMBER 11, 2009 -- The transaction will be structured as a merger whereby Ignis as the surviving entity will issue approximately 36 million shares to the current shareholders of Gemfire, corresponding to an ownership of 48% of the combined company.
NOVEMBER 11, 2009 -- Fiber-optic component suppliers Ignis ASA (Ignis) and GC Holdings Inc. (Gemfire) have entered into an exclusive term sheet for a business combination in the international market for integrated optics.
ignis and Gemfire say the combination of the two companies creates "a significantly larger entity" with economies of scale in all operational areas, and opens a broad product portfolio opportunity across a strong customer base in all the major geographical regions.
The transaction will be structured as a merger whereby Ignis as the surviving entity will issue approximately 36 million shares to the current shareholders of Gemfire, corresponding to an ownership of 48% of the combined company. Furthermore, as part of the transaction, privately held Palo Alto Investors (PAI) and Gemfire's current lead shareholder, will inject US$15 million in the combined company at a subscription price per share of NOK 5.50. The capital injection will capitalize the combined company for further growth and development in the expanding markets for fiber-optic components, and ensure maximum value creation through the merger. Ignis will be provided with a loan amounting to approximately US$3 million from PAI in the period from signing of the merger plan to the closing of the transaction.
Ignis's current shareholders will retain an ownership of approximately 43% in the combined company post-merger and the capital injection of US$15 million. The combined company will maintain its listing on the Oslo Stock Exchange following completion of the transaction. Ignis and Gemfire will receive two board seats each while PAI will receive one board seat.
"Ignis is experiencing substantial growth in the international markets for fiber optical components, particularly in Asia. I believe the complementary product portfolios, the operational economies of scale and our mutual market penetration will give the combined company an even stronger position for further growth and expansion in the international telecommunication sector," says Thomas Ramm, chiefe executive officer of Ignis, who will take the position as chairman of the combined company.
Richard Tompane, president and chiefe executive officer of Gemfire, who will become the CEO of the combined company, highlights the benefit of integrating the two product lines.
"Gemfire has been looking for an opportunity to leverage both active and passive wafer-scale architectures in the fiber optical industry and we are very excited about combining the companies. Together we will deliver highly competitive and cost-effective solutions supporting the fast-growing demand for high-speed broadband networks and form a clear market leader in the global fiber-optic industry sector. The international market reach and extensive manufacturing infrastructure of the combined company is making us extraordinarily well prepared for the next level expansion of the global telecom industry,” says Tompane.
The completion of the transaction is subject to i.a. completion of satisfactory due diligence investigations, final negotiation of mutually acceptable terms, and a definitive agreement for the transaction and approval of the transactions by an extraordinary general meeting of Ignis.
The companies will jointly prepare a merger plan that is expected to be signed by the respective companies' boards by the end of November 2009 and thereafter presented to an extraordinary general meeting of Ignis expected to be held in December. An information document which will provide more detailed information i.a. about the merged entity will be published in due course. The merger is expected to be completed by end of first quarter 2010 after the expiry of the creditor notification period.
ABG Sundal Collier is acting as financial advisor and Wiersholm, Mellbye & Bech, advokatfirma AS is acting as legal counsel to Ignis.