SAN JOSE, Calif. -- Expanding its efforts in communications, Bookham Inc. has agreed to buy Avanex Corp. for $35.4 million in stock.
The combined company will provide a complete portfolio of terminal and line product technologies critical for the metro and long haul markets.
''The combination of Bookham and Avanex creates synergies that we expect will significantly improve financial performance faster than either of the two companies could accomplish on a stand-alone basis," said Alain Couder, president and CEO of Bookham, in a statemement. Couder will lead the combined company with similar titles.
The company is expected to have two telecom divisions and one non-telecom division. The board of directors will be composed of Couder and three additional directors from the Bookham (San Jose) board, and Giovanni Barbarossa and two additional directors from the Avanex (Fremont, Calif.) board. Barbarossa is president and CEO of Avanex.
Under the terms of the agreement signed on January 27, 2009, which has been approved by both boards of directors, Avanex shareholders will receive, at a fixed exchange ratio, 5.426 shares of Bookham common stock for every share of Avanex common stock.
Upon the close of the transaction, Avanex shareholders will own approximately 46.75 percent of the combined company. Based on the closing price of Bookham on January 26, 2009 the total consideration to Avanex shareholders would be equivalent to $35.4 million or $2.17 per share.
The merger is subject to customary closing conditions including shareholder approval by both companies. Both companies will continue to operate their businesses independently until the close of the merger. The merger is expected to be completed within three to six months.