Infineon and Finisar torpedo fiber-optic deal
Infineon Technologies has called off the $200 million deal that would have seen US-based Finisar acquire Infineon's fiber-optic business unit, which includes III-V chip fabrication facilities.
According to the Munich-based company, Finisar's board had told Infineon that it was likely to withdraw its recommendation that shareholders vote in favor of the much-delayed acquisition.
"The significant delay and high uncertainty of closing are expected to result in deterioration of our fiber optics business and in potential harm to our customers," explained Infineon. "[The company] has therefore decided to terminate the agreement with Finisar."
When first announced in April 2004, Infineon stood to hold a 38% equity share in Finisar on completion of the switch, which was worth $263 million at the time.
Infineon's fiber-optic unit includes a III-V chip manufacturing facility at its Perlach fab in Munich, Germany, as well as a 56% holding in Taiwan-based Parolink, a joint venture with United Epitaxy Company. Both facilities would have been transferred to Finisar under the now-scuppered deal.
The two companies had claimed that the combined entity would be "the largest pure-play optical components company in the world".
Instead, the German chipmaker must now look again at how to restructure its fiber-optics business. It added that it would assess possible legal action to recover any damages incurred.
Rather than seeking another buyer, Infineon will now concentrate on restructuring the business, a move that the company admitted was likely to involve cost-cutting measures including redundancies. The business unit has maintained a staff level of 1200 people since the Finisar deal was first announced.
With overcapacity still a problem in the fiber-optic components sector, one possibility is that Infineon may close the entire unit, although a spokesman said that the company had "no intention" of doing this.
