Light Reading
Terminates sale of fiber optics business unit to Finisar, which had cooled on the deal

Infineon Calls Off $206M Sale

Light Reading
News Analysis
Light Reading
1/11/2005
50%
50%

Infineon Technologies AG (NYSE/Frankfurt: IFX) this morning terminated the $200 million-plus sale of its fiber optics business unit to Finisar Corp. (Nasdaq: FNSR) almost nine months after the original agreement was struck (see Infineon Halts Sale of Fiber Optics).

Infineon says ongoing delays and a lack of support from Finisar's board are to blame.

The original all-stock agreement, struck in April 2004, involved 135 million shares worth $232 million, and was set to pitch Finisar against Agilent Technologies Inc. (NYSE: A) in the optical transceiver market (see Finisar Buys Infineon Optics).

But last October, following weaker financial performance by the Infineon unit, the deal was amended to 110 million Finisar shares, valuing the transaction at $143 million at that time (see Finisar, Infineon Modify Terms and Finisar Cleared to Buy Infineon FO).

At the close of the financial markets yesterday, the deal was worth $205.7 million, with Finisar's share price ending the day at $1.87.

Now, though, Infineon says the deal is off, as Finisar's board was about to withdraw its recommendation to shareholders to vote in favor of the deal. The German firm says it will now restructure the fiber optics unit.

Infineon adds that the long delay and the "high uncertainty of closing are expected to result in deterioration of our fiber optics business and in potential harm to our customers," and that it will assess "the legal options to recover the damages incurred by way of an arbitration proceeding in Germany."

A spokesman says Infineon won't seek another buyer initially. "Our first priority is to fix the business," a process that will involve "several actions," though he declined to elaborate. The fiber optics business currently employs 1,200 staff worldwide, 350 of which are in Germany, and major job cuts look likely.

The news sent Infineon's share price down €0.18, more than 2 percent, to €7.78 on the Frankfurt exchange.

What's next for Infineon? One industry analyst, who preferred not to be identified, says the German vendor's unit isn't strong enough to tough it out in the market alone, and that closure is a possibility. "There are still ruthless price pressures and overcapacity in this market, and it's very painful for a lot of firms. The combination of Finisar and Infineon made a lot of sense, as the resulting business would have had the scale to challenge Agilent and JDS Uniphase Corp. (Nasdaq: JDSU; Toronto: JDU). But clearly the deal became less and less attractive to Finisar, which has been doing better on its own in recent months."

The analyst adds that this leaves Infineon with "a major dilemma if it can't find another buyer, and I can't see Finisar returning with another offer. Infineon needs to act quickly, as the past year has significantly impacted the fiber optic unit's business. No company can survive in the market on a small basis."

— Ray Le Maistre, International News Editor, Light Reading

(0)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View
Flash Poll
LRTV Huawei Video Resource Center
Network Solutions Help the Philippines Jump Ahead

9|17|14   |   2:59   |   (0) comments


In the past, the Philippines has under-invested in technology. Now, the CEO of Softshell talks about how Huawei products help the Philippines jump ahead as the economy improves.
LRTV Huawei Video Resource Center
VCS Observation for Safer Cities in the Netherlands

9|17|14   |   5:20   |   (0) comments


Holland's VCS Observation has been operating for 22 years. Its main goal is to get cities safer. CEO Wim van Deijzen tells us some of the challenges his company faces and how Huawei is helping to overcome these challenges.
LRTV Huawei Video Resource Center
A Conversation With Serbia's Ministry of Interior

9|17|14   |   4:38   |   (0) comments


At HCC 2014, the Assistant Minister of the Ministry of Interior of the Republic of Serbia talks to us about his projects and corporation with Huawei. Solutions like Safe City and E-Government and services like cloud computing are just some of the areas his department is interested in.
LRTV Huawei Video Resource Center
IHS Analyst Discusses eLTE at CCW 2014

9|10|14   |   7:09   |   (0) comments


Thomas Lynch, associate director of critical communications at IHS Technology, talks about broadband in critical communications.
LRTV Huawei Video Resource Center
TCAA on Huawei eLTE: A Broadband Solution for Mission-Critical Communications

9|10|14   |   2:29   |   (0) comments


At CCW2014 in Singapore, the TCCA's Phil Kidner talks about the importance of broadband data for critical communications.
LRTV Custom TV
Spotlight on Cisco: SDN for Optical Networks

9|8|14   |   9:27   |   (0) comments


Cisco's Greg Nehib talks OpenFlow and more on the 'Software-Defined Networking for Optical Networks' panel at the Big Telecom Event in June 2014.
LRTV Custom TV
Cisco's Evolved Programmable Network (EPN)

9|8|14   |   4:05   |   (0) comments


A look at the various demos Cisco showed at Light Reading's Big Telecom Event highlighting Cisco's EPN innovation and how SDN and NFV technologies are enabling a variety of new services.
LRTV Huawei Video Resource Center
The Future of Ultra-Broadband, With Kevin Kelly (UBBF2014)

9|5|14   |   1:13   |   (1) comment


If you think the technological changes we've seen up to now are astounding, just wait until you see what the future has in store. Discuss upcoming breakthroughs with Kevin Kelly, Founding Executive Editor of Wired Magazine, at the Huawei Ultra-Broadband Forum on September 24.
LRTV Huawei Video Resource Center
The Inaugural Optical Innovation Forum in Nice

9|2|14   |     |   (0) comments


More than 170 attendees from network operators, service providers, analyst firms, and component companies from around the world convened in Nice in June for the inaugural Optical Innovation Forum, co-produced by Huawei and Light Reading.
Wagner’s Ring
Data Centers Drive Telcos Into the Future

8|28|14   |   2:20   |   (2) comments


Data centers are at the heart of key trends driving telecom -- network virtualization, the drive for increased agility, and the need to compete with OTT providers.
LRTV Custom TV
Why SPs Should Consider Cisco's EPN

8|27|14   |   5:40   |   (0) comments


Sultan Dawood from Cisco discusses Cisco's EPN, which enables SPs to build agile and programmable networks delivering new network virtualized services using Cisco's Evolved Services Platform (ESP).
LRTV Huawei Video Resource Center
Huawei’s Showcase @ Big Telecom Event 2014

8|26|14   |   2.56   |   (0) comments


SoftCOM is Huawei's framework for telecom business and network transformation. Haofei Liu, Solution Marketing Manager, Carrier Business Group, Huawei, showcases Huawei's SoftCOM architecture in this video.
Upcoming Live Events!!
September 23, 2014, Denver, CO
October 29, 2014, New York City
November 6, 2014, Santa Clara
November 11, 2014, Atlanta, GA
December 2, 2014, New York City
December 3, 2014, New York City
December 9-10, 2014, Reykjavik, Iceland
June 9-10, 2015, Chicago, IL
Infographics
A survey conducted by Vasona Networks suggests that 72% of mobile users expect good performance all the time, and they'll blame the network operator when it's not up to par.
Today's Cartoon
Vacation Special Caption Competition Click Here
Latest Comment
Hot Topics
Glimpsing the Self-Driving Car
Dan Jones, Mobile Editor, 9/12/2014
AT&T to Launch WiFi Calling in 2015
Sarah Reedy, Senior Editor, 9/12/2014
AT&T: We'll Bundle Fixed Wireless & DirecTV
Mari Silbey, Independent Technology Editor, 9/15/2014
New NFV Forum Focused on Interoperability
Carol Wilson, Editor-at-large, 9/16/2014
NFV & The Data Center: Top 10 Takeaways
Sarah Reedy, Senior Editor, 9/18/2014
Like Us on Facebook
Twitter Feed