News Article
Emcore to sell VCSEL-based product line assets to SEDU for $17 million
The firm is selling fixed assets, inventory and intellectual property for the VCSEL-based product lines within Emcore's fibre optics business unit. The transaction will allow the company to invest further in telecom, broadband and specialty photonics products
Emcore is to sell certain assets and transfer certain obligations of its Vertical Cavity Surface Emitting Lasers (VCSEL)-based product lines to Sumitomo Electric Device Innovations USA, Inc. (SEDU).
Subject to closing adjustments, the consideration for this sale will be $17 million in cash.
The assets to be sold include fixed assets, inventory and intellectual property for the VCSEL-based product lines within Emcore's fibre optics business unit. These product lines include VCSEL and photodiode components, parallel optical transceiver modules, and active optical cables.
Emcore will retain its Telecom and Broadband fibre optics products that include its market leading tuneable lasers, tuneable XFPs, cable TV modules and transmitters, FTTx transceivers, InP-based lasers, photodiodes, and modulators, video transport and specialty photonics products.
The sale of the VCSEL product line allows Emcore to focus its fibre optics product portfolio in areas of strong product differentiation. In fiscal year 2011, the VCSEL-based product lines contributed approximately 5 % of Emcore's overall revenue.
Emcore says the sale of the VCSEL-based product should simplify the firm's operating structure, reduce fixed costs, and improve market focus. Emcore's core competencies in compound semiconductor-based products and performance capabilities remain the cornerstones of its Fibre Optics business, addressing high-speed fibre optic transmission for telecom, broadband, and military and defence applications.
"The decision to sell the VCSEL-based product lines is strategic and market driven," comments Hong Hou, Emcore's Chief Executive Officer. "Our product and technology portfolio is strongly aligned to support current and future requirements in tuneable, coherent high-speed transmission systems and next-generation broadband architectures."
"The proceeds from the transaction significantly improve our balance sheet and the sale is expected to reduce the time to reaching profitability. Along with the improved operating model, the transaction will benefit our customers as we focus our investment in telecom, broadband and specialty photonics products to remain industry leaders in those respective product lines in our fibre optic business segment", concludes Hou.
The transaction is expected to close shortly after securing regulatory approval by the Committee on Foreign Investment in the United States ("CFIUS").
