Optical components

Oplink & OCP Seal Deal

About six weeks after a semi-hostile takeover bid by Oplink Communications Inc. (Nasdaq: OPLK) failed to win over the Optical Communication Products Inc. (OCP) (Nasdaq: OCPI) board, the companies announced that they have finally reached terms in a deal that everyone can agree on. (See Oplink Reaches OCP Deal.)

Oplink said it completed its deal to acquire a 58.1 percent stake in OCP held by Furukawa Electric Co. Ltd. for $1.50 per share. In addition, Oplink agreed to pay shareholders $1.65 per share for the remaining 41.9 percent of OCP that Furukawa didn't own.

That marks a 10.7 percent premium for the outstanding shares of OCP over Tuesday's closing price of $1.49. It would bring the total value of the deal to about $177.7 million.

Needham & Co. analyst John Harmon says that despite the premium on Oplink's original offer, the company "still got a great deal."

"Ten percent more for the remaining block of shares won't make a material difference in the deal," he says.

Oplink first launched its bid for OCP in April, when it announced it would purchase Furukawa's majority stake in the company for $1.50 per share, and extended an equal $1.50 per share offer price to minority shareholders. (See Oplink: We're Down With OCP and Oplink Buys OCP Stake.)

The initial bid was rebuffed by the OCP board, which set up a Special Committee to review the offer. Under pressure due to Oplink's attempts to expedite its purchase of the Furukawa stake, OCP's board initiated a shareholder rights plan, or poison pill, that would make an attempt to buy the minority stake prohibitively expensive. (See OCP Announces Special Committee, OCP Adopts Plan, and OCP Pops a Poison Pill.)

From there, the companies took to the courts, as Oplink sued to strike down the poison pill and OCP defended its right to review Oplink's offer. After losing in a Delaware court, Furukawa announced that, with its majority stake, it would expand the OCP board of directors, adding four of its own appointees and effectively overturning the poison pill. (See Oplink Challenges OCP, Legal Battle Drags Down Oplink , Court Denies Oplink, and OCP Board Expands.)

While it is unclear how the companies finally agreed on the $1.65 per share price -- neither company's representatives could be reached for comment -- it seems most of the deal's major hurdles have already been passed.

The purchase of OCP's outstanding shares is still subject to a definitive merger agreement and will require a two-thirds vote in favor from shares not already owned by Oplink. The deal is subject to customary closing conditions, and it is expected to close in the third quarter of 2007.

By close of market, Oplink shares fell $0.16 (0.91%) to $17.18. Shares of OCP rose $0.09 (6.04%) to close at $1.58.

— Ryan Lawler, Reporter, Light Reading

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