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NeoPhotonics Acquires Lapis Semiconductor's Optical Business

The indium phosphide expert is adding capabilities for data rates of 100G and above and will expand its PIC integration. The acquisition will also strengthen the firm's profile in Japan and provide entry in to the high speed IC market
InP PIC specialist NeoPhotonics has finalised its acquisition of the semiconductor optical components business unit (OCU) of Lapis Semiconductor Co., Ltd.

Lapis designs and manufactures high speed lasers, laser drivers, photodiodes and amplifiers for high speed networks.

OCU was previously the component division of OKI Electric for high speed lasers and high speed III-V amplifiers before it was acquired by Rohm Semiconductor in 2008. The OCU business was merged into and now operates as NeoPhotonics Semiconductor GK, a Japanese subsidiary of NeoPhotonics.

Neophotonics specialises in manufacturing InP and silica-on-silicon photonic integrated circuit (PIC) based modules.

“We are pleased to have closed the previously announced acquisition of the optical components unit of Lapis Semiconductor in accordance with our purchase agreement and earlier than planned," says Tim Jenks, Chairman and CEO of NeoPhotonics.

“We look forward to this expansion of our 100G product suite, our further strategic expansion into the Japan market, the addition of new global network equipment and module customers, and expanding our business opportunities with our current mutual customers."

On March 29th, 2013, NeoPhotonics paid approximately $10.2 million in cash for the business of OCU, after adjustments, and approximately $3.7 million in cash as the first of four equal payments for the associated real estate.

In the transaction, NeoPhotonics also assumed employee retirement obligations of approximately $6.5 million and compensation obligations of approximately $0.6 million. The total consideration for the real estate including the payment was approximately $14.6 million with the balance payable over the next three years.

Including the future payments for real estate, the total purchase price amounted to approximately $35.2 million. The purchase consideration was based on the Japanese Yen.

On March 21st, 2013, NeoPhotonics entered into a syndicated Revolving Credit and Term Loan Agreement with Comerica Bank, as administrative agent and lead arranger. East West Bank has also become a lender under this facility.

NeoPhotonics borrowed $28 million under the term loan facility and $12 million under the revolving credit facility to refinance existing company indebtedness of approximately $20.9 million and help finance the OCU acquisition and related transaction expenses.

Anticipated OCU Financial Impact

Based on preliminary unaudited pro forma financial information provided by the management of Lapis Semiconductor, OCU had revenue of approximately $45 million for the first nine months ended September 30th, 2012.

NeoPhotonics plans to provide an update on the OCU business, now NeoPhotonics Semiconductor GK, when it releases its quarterly financial results for the first quarter of 2013, which is currently expected to be in the first half of May 2013. The company is also preparing the required historical and pro forma financial results reflecting the acquisition and plans to file the information with the Securities and Exchange Commission within the next 75 days, or by June 12th, 2013.

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