April 11, 2008 -- Emcore has announced a definitive agreement with Intel to acquire the enterprise and storage assets of Intel's Optical Platform division, as well as the Intel Connects Cables business. Emcore will issue 3.7 million shares of restricted stock for the acquisition, with certain adjustments based on Emcore's stock price twelve months after the closing of the transaction.
"Following the successful acquisition of the telecom-related assets of Intel's Optical Platform division, this second acquisition from Intel enables Emcore's fiber optics business to be a significant supplier for both telecom and datacom products," comments Reuben F. Richards, executive chairman, Emcore. "This acquisition will provide additional manufacturing efficiencies through economies of scale and vertical integration, benefiting our enterprise, storage, telecom, cable and high-performance computing customers."
The acquired assets include intellectual property, inventory, fixed assets and technology relating to optical transceivers for enterprise and storage customers, as well as optical cable interconnects for high-performance computing clusters. The transaction is expected to close in the second quarter of this year. Emcore expects the acquisition to enhance its market presence in the optical communications segment, especially in the areas of 10 Gigabit Ethernet and storage area network transceivers.
"Emcore projects this asset will add $45 million in revenue for the next 12 months, increase gross margin from 23 to 29 percent, and be accretive to earnings," continues Richards. "The Intel Connects Cables business provides an innovative solution for high-performance computing cluster interconnect applications, using embedded parallel optical transceivers with a multimode fiber ribbon. Emcore expects this business to have gross margins exceeding 50% and to be the fastest growing segment of the acquired assets."
Intel says the sale of its optical-related assets will enable it to focus its investments on core communications and embedded market segments, in line with its platform strategies. The company says it will continue its efforts on the Universal Serial Bus (USB) 3.0 specification, which is slated to support optical and silicon photonics research and development.
"Customers are driving consolidation and vertical integration in the optical communications market segments," concludes Doug Davis, vice president of Intel's Digital Enterprise group, and general manager of its Embedded and Communications group. "We will work together to complete a smooth transition of these businesses, building upon the experience in the telecom optical components acquisition."