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Avanex/Bookham Redux

Craig Matsumoto

1:15 PM -- Rumors of Avanex Corp. (Nasdaq: AVNX) and Bookham Inc. (Nasdaq: BKHM; London: BHM) reconsidering a merger have been floating around for months now, getting extra juice when Avanex CEO Jo Major was fired. (See Avanex Axes CEO Jo Major.)

Now there's some Securities and Exchange Commission (SEC) evidence to chew on. Morgan Keegan & Company Inc. analyst Paul Bonenfant points out a filing last night that describes changes in executives' agreements with the company; they're given some incentives to stick around should Avanex get acquired by... somebody...

Granted, that might not mean anything. The filing could be routine, or it could be in preparation for a deal that never closes. I'm convinced Avanex and Bookham did, indeed, come close to a deal in 2006, and that didn't work out. (See Will Avanex Hook Bookham?)

Moreover, Bonenfant points out it's not clear how the deal would be structured. Bookham has the larger market capitalization -- about $40 million versus Avanex's $20 million, based on today's massive stock movements -- but their annual revenues aren't that far apart: $250 million for Bookham and $200 million for Avanex.

About those stock prices: It's sometimes hard to tell what moves particular stocks these days, but Avanex and Bookham are definitely moving. Avanex, at this writing, is up a whopping 38 cents (44%!) to $1.24, while Bookham is down 4 cents (9%) at 40 cents.

— Craig Matsumoto, West Coast Editor, Light Reading

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12/5/2012 | 3:26:09 PM
re: Avanex/Bookham Redux
So, two companies, both burning cash, with significant product crossover, want to merge. Nice.

I am sure Avanex doesn't care who buys them, they'll be bankrupt soon anyway. But this would be completely bonehead for Bookham.

If people are smart they will let Avanex die and pick up the pieces in a fire sale. (I know, I know, people in this space are nott to smrt.)
12/5/2012 | 3:26:07 PM
re: Avanex/Bookham Redux
I think its beautiful. Why not go out with a bang?
12/5/2012 | 3:26:04 PM
re: Avanex/Bookham Redux
First, I welcome if finally some of the remaining "bigger" players would consolidate. The industry still needs that. Second, having a clause in the executive contract to prepare for M&A is more than expected for a company like Avanex whose market cap has deteriorated drastically. If Bookham or someone else, consolidation is still a requirement before that sector can have sustainable margins and growth.
12/5/2012 | 3:26:03 PM
re: Avanex/Bookham Redux
It does - the value of AVNX is not primarily in their equipment or product technology but market access. If you let them go down, you loose the market access. JMHO
12/5/2012 | 3:26:01 PM
re: Avanex/Bookham Redux
No New money no deal
the deal could be done on an all share basis but you would still need to cover the restructuring costs and avenex and bookham simply don't have the cash. If a deal is to be done it has to be with someone else avanex/oplink redux would make more sense, or howabout a threesome !! Not likely however.
12/5/2012 | 3:26:01 PM
re: Avanex/Bookham Redux
Good point.
Market access, customer bases, are of the same importance as the technology or products for a company.
However, one would wonder why a company with good customer base and products are doing badly?
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