Fibre optic subsystems and components maker Finisar has agreed to acquire US/Israeli business Red-C Optical Networks in a bid to expand the listed company’s product lines.
In the first instance, the Sunnyvale-based firm will pay approximately USD 23.70 million in cash for the target, with a potential USD 20.00 million earn-out option - which could be settled in shares - subject to the achievement of certain financial performance milestones during 2013.
As of 31st March 2012, Red-C had USD 3.20 million in cash and no debt.
The deal is expected to close before 31st July, following which the target will operate as a subsidiary of Finisar, with its main operations continuing at the current facility in Israel.
Eitan Gertel, chief executive of Finisar, said: "RED-C has been an innovator in optical amplification, which we view as an increasingly critical technology as networks get faster and more complex.
"As we have further penetrated the line card market with our differentiated WSS technology, we see this acquisition as a tremendous opportunity to further innovate for our customers and advance our vertical integration strategy."
Red-C was founded in 2000 by Yossi Boker and Dr Uri Ghera, and had previously been a division of Elop Electro-Optics Industries, which later merged with Elbit Systems.
It is headquartered in the US, and has a wholly-owned subsidiary in Tel Aviv which employs 140 people.
The acquisition of Red-C marks the first by Finisar since the takeover of Norwegian optical component maker Ignis last July.
In its latest financial results for the quarter ended 30th April 2012, the Sunnyvale-based company announced a 1.3 per cent dip in revenue, from USD 242.95 million to USD 239.91 million.
Finisar’s share price has also lost some value this year, slipping from a 12-month high of USD 20.16 last March to 12.82 last month.
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