INDUSTRY FOCUS M&A’S
2019: A YEAR OF CONSOLIDATION
Deals That Made The News In 2019
Most sectors of the telecoms industry undergo a degree of consolidation from time to time, particularly when a new technology is coming to market, and the fibre industry is no exception. The sector has responded to the onset of 5G and the global demand for higher broadband capacity with massive developments in cable design, connectivity, photonic components and transmission, and as a result, some of the larger companies have been hitting the acquisition trail to offer more complete solutions, writes Peter Dykes.
II-VI + FINISAR Probably the biggest deal of 2019 was optoelectronic device manufacturer II-VI’s acquisition of Finisar for around US$3.2 billion, completed in September 2019, following antitrust clearance from the Chinese State Administration for Market Regulation. Under the terms of the agreement, Finisar shareholders will receive on average US$15.60 in cash and 0.2218 shares of II-VI common stock per 1.0 share of Finisar common stock depending on each shareholder’s election as laid out in the merger agreement. The financing for the transaction was US$1.9 billion of cash raised in a combination of Term Loans A and B with a combined interest rate of L+251 and US$1.1 billion of the company’s stock, with Finisar shareholders owning around 32% of the combined company.
CISCO + ACACIA Another big acquisition in 2019 was network infrastructure company Cisco’s purchase of coherent optics specialist Acacia for US$2.6 billion. This is a classic case of a large company acquiring expertise it doesn’t currently possess in a developing market. The reasoning behind the purchase is that while Acacia is a relatively small company, it is very involved in the coherent optical interconnect market which looks to be growing rapidly in value and is already a multi-billion-dollar market, as demand for coherent optical interconnect moves from rack-based to pluggable components. Although Acacia has been supplying its optical systems and routers to Cisco for some time, taking the technology in-house should give Cisco more traction with its service provider and cloud customers.
This deal means the combined company can offer a wide range of high- performance data communications transceivers, coherent transmission technology and ROADM solutions. II-VI will be able to address markets which include products next-generation subsea, long-haul and metro networks, hyperscale datacentres and 5G optical infrastructure, LIDAR optoelectronics and laser design. The merged company will also have a combined portfolio, which includes optoelectronic, optical and integrated circuit device design expertise, as well as GaAs, InP, SiC, GaN and diamond technologies, increasing its footprint in the burgeoning markets for RF devices for next-generation wireless, military applications, electric cars and green energy. Read the full story here.
INDUSTRY FOCUS 2019/2020
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