Both Companies Expect to Report Record Revenues for Most Recent Quarter
Finisar Corporation (NASDAQ: FNSR) and Optium Corporation (NASDAQ: OPTM) jointly announced today thatthey have entered into a definitive agreement under which the two companieswill be combined through an all-stock merger, creating the world's largestsupplier of optical components, modules and subsystems for thecommunications industry. The combined company will leverage Finisar'sleadership position in the storage and data networking industries andOptium's leadership position in the telecommunications and CATV industries.
Both companies also jointly announced today that they expect to report newrecord revenues for their most recent quarters.
Overview of Strategic Combination
-- Creates the world's largest supplier of optical components, modules and subsystems to the communications industry with the broadest product portfolio;-- Generates new growth opportunities in attractive end markets;-- Broadens core customer relationships with complementary product portfolios;-- Enhances global manufacturing flexibility combining low cost/high volume and mass customization expertise;-- Creates unparalleled combined R&D resources with enhanced ability to innovate and bring new products to market;-- Transaction expected to be accretive to non-GAAP earnings on a run- rate basis one year from closing;-- Estimated annualized pre-tax cost synergies of approximately $10-$15 million;-- Jerry Rawls to remain executive Chairman of Finisar's board; Eitan Gertel to become President and CEO.
Based on the twelve months through January 2008 reported by each company,the combined company had revenues of approximately $554 million. Based onrevenues expected to be reported for the most recent quarter, annualizedrevenues for the combined company would total approximately $660 million.The combined company will have approximately 5,000 employees world-wide.
"This combination leverages the unique strengths of both companies," saidEitan Gertel, Chairman and CEO of Optium Corporation. "In combining withFinisar, we will unleash a powerful opportunity to create added shareholdervalue through breadth of product, enhanced customer support andmanufacturing flexibility. With little product overlap, the proposedcombination will complement both companies by providing more choice forcustomers, best-in-class technologies, focused technology innovation andcost efficiencies to meet our customers' requirements. Customers andemployees will be treated with the utmost care in combining our twocompanies."
"We are excited to combine with a successful company like Optium," saidJerry Rawls, Chairman, President and CEO of Finisar Corporation. "Giventhe scale required to be competitive in meeting global customer needs,consolidation in the optical space is long overdue. In Optium, we havefound the perfect partner. Optium has strong product technologiesaddressing some of the fastest growth markets in our industry. Inaddition, Optium's fabless manufacturing model will allow us to morereadily capture the benefits of scale, while maintaining effectiveresources to serve customized technology requirements. More importantly,we believe both companies share a common culture that strives forinnovation while exceeding customer expectations."
Meaningful cost synergies totaling approximately $10-$15 million areexpected from the combination, with the substantial majority expected on arun-rate basis one year from the closing. Economies of scale associatedwith a larger purchasing base, rationalization of the combinedinfrastructure and manufacturing flexibility driven by Finisar's verticalintegration and Optium's highly automated in-house manufacturingcapabilities are all expected to contribute to these cost synergies. Thetransaction is expected to be accretive to earnings per share on a non-GAAPbasis in one year post-closing.
The combination is also expected to generate revenue synergies as a resultof having complementary product portfolios with substantial cross-sellingopportunities. Together, the combined company will offer the broadestportfolio of optical communications products to equipment manufacturers.
Transaction Details
Under the terms of the merger agreement, which has been approved by theboards of directors of both companies, Optium stockholders will receive6.262 Finisar shares for each Optium share they own. Optium options andwarrants will represent a corresponding right to acquire a number ofFinisar shares based on the exchange ratio. Finisar is expected to issueapproximately 160 million common shares in the proposed combination. Uponcompletion of the combination, Finisar shareholders will own approximately65% of the combined company and Optium shareholders will own approximately35% of the combined company. Shares of the combined company will continueto trade on the NASDAQ Select Market under the symbol: FNSR.
