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Avanex Agrees to Buy 2 Optical Businesses

May 13, 2003|From Reuters

Avanex Corp. said Monday that it has agreed to acquire the optical component businesses of both Alcatel and Corning Inc. for $67.4 million in stock, bolstering its position as a maker of components and subsystems for fiber-optic networks.

The transaction calls for Alcatel to hold a 28% stake in Avanex and for Corning to hold a 17% stake. The figures are based on Avanex's Friday closing price of $1.12.

Based on current share levels, Alcatel would receive about 35.2 million Avanex shares and Corning would receive 21.4 million shares.

Alcatel also is expected to contribute more than $110 million in cash to the venture and enter into a supply agreement whereby Avanex would supply solutions to Alcatel's optical networking products over a three-year period.

Corning is expected to contribute more than $20 million in cash.

Avanex, headquartered in Fremont, Calif., said the deals are expected to close in the third quarter.

The company also said there are immediate opportunities for cost reductions, but did not provide details.

Corning said it would exchange a significant portion of its photonic technologies business to Avanex for stock valued at about $25 million.

Avanex, which has fewer than 450 employees, estimated it would have 1,600 after the deals close.

Shares of Avanex on Monday rose 7 cents to $1.19 on Nasdaq. Corning's shares closed up 8 cents to $5.98, and Alcatel rose 28 cents to $8.52, both on the New York Stock Exchange.

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