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May 24, 2006
CHATSWORTH, Calif. -- Luminent, a wholly-owned subsidiary of MRV Communications (Nasdaq: MRVC - News), and Huagong Tech Company Limited ("HG Tech") announced today that they have entered into an agreement in which Luminent has agreed to acquire HG Genuine Opto, a subsidiary of HG Tech. HG Genuine Opto, headquartered in Wuhan, is the second largest fiber optic transceiver manufacturer based wholly in China. Under the agreement, Luminent will acquire HG Genuine for $40 million in cash and 15 percent of Luminent's common stock to be outstanding at the time the acquisition closes. The closing is subject to the satisfaction of various conditions, including completion of due diligence and obtaining necessary governmental and third-party approvals and consents in the U.S. and China as well as other customary closing conditions. Assuming the transaction closes as expected, MRV will own 85 percent and HG Tech will own 15 percent of the resulting company. In the event that certain conditions following the closing are not met, HG Tech has, under the terms of the signed agreement, the right to sell its interest in Luminent back to MRV for $45 million in cash or stock.
Near Margalit, CEO of Luminent, commented, "We believe the technology, cost structure, and increasingly global customer base of the combined company will provide a complete solution for Metro and Access transceivers. The combined entity should have an average monthly module run rate surpassing 200,000 units. HG Genuine provides a distinctive combination of technical expertise, manufacturing capacity, and cost structure that complements Luminent's rapid growth and expansion in fast growing Metro and Fiber to the Premises markets. The anticipated annual revenues of the combined company are expected to solidly place Luminent among the top fiber optic component suppliers in the world."
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