Opel Announces Third Party Valuation Of Its POET Technology
The technology, which makes it possible to monolithically integrate a wide number of electronic and optoelectronic functions onto a single GaAs chip, is estimated to be worth over $1 billion.
Opel Solar International is in receipt of a third party valuation of intellectual property developed by its U.S. affiliates Opel, and Odis.
The Planar Opto Electronic Technology (“POET"), initially developed by Geoffrey Taylor at the University of Connecticut and licensed to Opel, is a semiconductor fabrication technology that enables the dense packing of digital, analogue, and optical circuits on to a single gallium arsenide chip.
The technology now makes it possible to monolithically integrate a wide number of electronic and optoelectronic functions in a single chip with higher speeds and reduced power consumption compared to Silicon CMOS.
For the same functionality, the chip size would be considerably reduced to approximately the size of half a person’s thumb nail. Opel commissioned a valuation analysis of the POET Technology portfolio (“POET Technology") by an independent, third party valuation firm, Pellegrino & Associates.
The Pellegrino firm performed an analysis of the uses of the POET Technology, the sales it could achieve in its targeted end-markets and likely margins if Opel can complete its research and development activities successfully and the market adopts the POET Technology.
Using a number of valuation techniques and based on technical information provided to it by the Company, the valuation firm has estimated that the POET Technology portfolio could be worth as much
as approximately $1 billion. This worth is derived from a range of values; the median value being $966.6
million, while the mean valuation was reported at $1.31 billion.
Using the income approach to value, Pellegrino & Associates, LLC built a valuation model to determine the economic income that might be possible from the potential exploitation of the POET Technology in several prospective markets.
Pellegrino & Associates, used market data, revenue projections, investment data, and cost data as from various sources, including from Odis representatives, to determine the economic income attributable solely to the POET Technology. Pellegrino & Associates then integrated the information into a valuation model, accounting for the economic life of the POET Technology.
Pellegrino & Associates, LLC performed a royalty rate analysis to determine what the market may bear as a reasonable royalty rate for the exclusive use of the POET Technology. They developed a risk-adjusted discount rate to discount forecast future free cash flows to determine a nominal value indication as of the appraisal’s effective date.
To account for the uncertainty inherent in the valuation process, Pellegrino & Associates captured the complex model interactions in the face of uncertain estimating assumptions using Monte Carlo simulation techniques. This did not constrain the valuation model to any single value predictions of key values such as royalty rates or costs. The firm then programmed the valuation model to recalculate repeatedly to create a distribution of outcomes. Pellegrino & Associates used the range of values calculated by the model to come to a final determination.
In complex situations that involve uncertainty, this methodology helps to generate meaningful estimates that would otherwise be impossible to model using discrete methods such as best-, expected-, and worst-case modelling. Pellegrino & Associates used the median value from this simulation process as the fair market value for the POET Technology.