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
From The Founder
It's clear to me that the communications industry is divided into two types of people, and only one is living in the real world.
LRTV Documentaries
Paul Bunyan's Giant Gigabit Plans

12|22|14   |   03:26   |   (0) comments


Gary Johnson, the CEO and GM of Minnesota rural operator Paul Bunyan Communications, discusses the company's 5,000-square-mile gigabit network rollout.
LRTV Interviews
CenturyLink: Building the Case for NFV

12|19|14   |   02:14   |   (0) comments


At the 2020 Vision Executive Summit, James Feger, VP, Network Strategy & Development at CenturyLink, talks about how the US operator is approaching virtual network functions from an operational and business case perspective.
LRTV Interviews
Liberty Global Sees Business Goldmine

12|18|14   |     |   (0) comments


Steen Sorensen, VP of business services for Liberty Global, explains where the giant international MSO sees growth potential.
LRTV Documentaries
EE: The Road to 5G

12|16|14   |   16:02   |   (1) comment


Andy Sutton, the principal network architect at UK mobile operator EE, explains how his company is using Wembley stadium as a wireless test bed and how that's helping EE to plan the evolution to 5G.
LRTV Huawei Video Resource Center
Highlights of Huawei's NFV Open Cloud Forum 2014

12|16|14   |     |   (0) comments


Huawei hosted its inaugural NFV Open Cloud Forum during the SDN & OpenFlow World Congress 2014 in Düsseldorf, Germany. The Forum brought together technology thought leaders, senior executives and telecom professionals from global carriers, industry associations, as well as other partner companies in the ecosystem, to exchange views on and collectively explore how ...
LRTV Custom TV
Realizing Operators' Digital Vision

12|16|14   |   5:23   |   (0) comments


Leveraging technology is fundamental to digital transformation but understanding customers and serving them really well is at the heart of digital businesses. TM Forum lists the following as the strategic pillars of the digital business: business agility and rapid innovation, operational agility and effectiveness, IT and data centricity, plus customer centricity. ...
LRTV Documentaries
US Cellular Injects Analytics Into LTE

12|16|14   |   2:57   |   (1) comment


US Cellular's Mario Vela explains how the operator uses analytics for network planning and what comes next as the carrier looks to eke more value out of its metrics.
LRTV Interviews
How Cox Biz Plans to Keep Growing

12|15|14   |     |   (2) comments


Steve Rowley, SVP of Cox Business, details how the third-biggest US MSO intends to boost its revenues to $2 billion and beyond over the rest of the decade
LRTV Huawei Video Resource Center
Interview With Bill Zhang, Director of SoftCOM Product Management, Huawei

12|15|14   |   2:50   |   (0) comments


Bill Zhang elaborated on Huawei's open philosophy in NFV solution development and network architecture design at the SDN & OpenFlow World Congress 2014.
LRTV Huawei Video Resource Center
Event Highlights: Huawei at SDN & OpenFlow World Congress 2014

12|15|14   |   3:43   |   (0) comments


Huawei joined the 2014 SDN & OpenFlow Congress as one of the key sponsors and contributors. At the event, Huawei reinforced the openness and flexibility of its network infrastructure strategies, and provided updates on its SDN and NVF innovations. Through participations at the exhibitions, forums and speeches, Huawei encouraged the industry to "think bigger and ...
LRTV Interviews
How Cable Biz Services Hit $10B Mark

12|12|14   |     |   (1) comment


Cable operators reached $10 billion in annual business services revenues by delving deeper into their vertical markets and expanding beyond the smallest firms.
LRTV Documentaries
Mediacom Aims to Test Connected Tractors

12|11|14   |   05:07   |   (3) comments


Cable business service provider is taking its services to the 'agribusiness' sector in partnership with farm equipment specialist John Deere and is getting involved in Gigabit Cities developments.
Upcoming Live Events
February 10, 2015, The Westin Peachtree Plaza, Atlanta, GA
March 17, 2015, The Cable Center, Denver, CO
April 14, 2015, The Westin Times Square, New York City, NY
May 6, 2015, McCormick Convention Center, Chicago, IL
May 13-14, 2015, The Westin Peachtree, Atlanta, GA
June 9-10, 2015, Chicago, IL
Hot Topics
T-Mobile, BlackBerry Flirt With Reuniting
Sarah Reedy, Senior Editor, 12/17/2014
1-Gig: Coming to a Small Town Near You
Jason Meyers, Senior Editor, Gigabit Cities/IoT, 12/17/2014
Comcast Launches 4K Streaming Service
Alan Breznick, Cable/Video Practice Leader, 12/18/2014
US Carriers, You're Going to Cuba!
Mitch Wagner, West Coast Bureau Chief, Light Reading, 12/18/2014
Google Steering Android Towards Cars – Report
Dan Jones, Mobile Editor, 12/19/2014
Like Us on Facebook
Twitter Feed
Webinar Archive