Optical components

Opnext Snubs Private Equity, Sticks With Oclaro

Opnext Inc. (Nasdaq: OPXT) has turned down a $1.40-per-share offer from a private equity firm and still plans to get acquired by Oclaro Inc. (Nasdaq: OCLR).

Opnext made that announcement late Monday and didn't name the firm involved. The unsolicited offer came on May 23 and would have been subject to some due diligence checking by the private equity firm. Opnext officially rejected the offer on May 31.

A statement from Opnext says the company simply found that the offer "was not financially more favorable to Opnext's stockholders" than the Oclaro deal. Oclaro is acquiring Opnext in a stock swap of 0.42 Oclaro shares per Opnext share. That equates to 97 cents per share, as of Monday's stock-market closing -- and that's exactly the price at which Opnext ended trading Monday.

Opnext shares were trading up $0.17 (17.5%) at $1.14 after-hours.

The Oclaro deal is still expected to close early next quarter -- that is, sometime shortly after June 30.

Why this matters
All year long, sources have been telling Light Reading that private equity firms are eyeing the optical components sector but haven't found a good "in" yet. The offer for Opnext suggests that at least one firm would be willing to buy into the sector with a smaller deal -- Opnext by itself, rather than Opnext plus Oclaro.

Oclaro's stock closed at $4.66 per share on March 26, when the Opnext deal was announced, and it's at half that price now -- so that's one likely reason why private equity tried to step in.

Table 1: How Oclaro's Offer Has 'Shrunk'
March 26 June 4
Oclaro closing stock price $4.66 $2.31
Opnext closing stock price $1.13 $0.97
Opnext valuation $102 million $88 million
Approx. value of Oclaro's offer for Opnext* $176 million $88 million
* 0.42 shares of Oclaro per share of Opnext, times 90.4M shares outstanding
Source: Yahoo Finance, Light Reading

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— Craig Matsumoto, Managing Editor, Light Reading

Pete Baldwin 12/5/2012 | 5:31:07 PM
re: Opnext Snubs Private Equity, Sticks With Oclaro

With Oclaro's stock price having fallen so much, I guess private equity decided to take a shot for bargain-hunting's sake. Not sure how much they could have done with a solo Opnext, though; it would make more sense to combine it with other pieces -- which is the situation Opnext was in in the first place.

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