28 April 2016

POET to acquire Singapore-based opto device maker DenseLight

POET Technologies Inc of San Jose, CA, USA — which has developed the proprietary planar optoelectronic technology (POET) platform for monolithic fabrication of integrated III-V-based electronic and optical devices on a single semiconductor wafer — has agreed to acquire Singapore-based DenseLight Semiconductors Pte Ltd, a privately held designer and manufacturer of photonic sensing and optical light source products and solutions for the communications, medical, instrumentations, industrial, defense, and security industries. 

Upon completion of the deal, which is subject to applicable regulatory reviews and approvals, including approval of the TSX Venture Exchange, POET will own 100% of DenseLight and its global photonics business and assets, including fabrication facility, intellectual property and technologies.

DenseLight processes indium phosphide (InP) and gallium arsenide (GaAs) III-V based optoelectronic devices and photonic integrated circuits (PICs) through its in-house wafer fabrication and assembly & test facilities. The firm is recognized for its high-performance infrared super-luminescent light sources and lasers, with a proven track record in deployed applications.

POET says that the revenue-accretive acquisition will provide it with a fab infrastructure for future product development, access to product sales and channel distribution networks, and a broader product portfolio of photonic products. Collectively, this will enable POET to better service the end-to-end datacoms market, it is reckoned. Additionally, POET expects to gain intellectual property and know-how that will enhance its presence in the fast-growing telecom access network markets for passive optical networks (PON) and in other markets complementary to datacoms.

POET intends to expand the operation of DenseLight's existing manufacturing facilities in Singapore, which generated revenue of US$2.6m in 2015 and a consistent gross profit in excess of 40% in each of the three previous years. POET anticipates that DenseLight as a division will achieve positive net income by fiscal 2017. 

Ancillary benefits of the strategic acquisition include DenseLight's test and reliability capabilities, which will accelerate new product introduction (NPI). Also, DenseLight's location should increase supply-chain efficiencies, as existing suppliers are located within the same geographic zone, facilitating ease of communication, interaction and real-time testing on future and current product development. POET will also benefiting from an investment of more than S$50m made to date by DenseLight shareholders to enhance the firm's core competencies. While DenseLight is a strategic acquisition, POET is also engaged in advanced stages of other avenues that it expects will accelerate the path to revenue over the next 12 months and further its monetization strategy.

"The acquisition of DenseLight Semiconductor reflects a new chapter in our history, and serves as a significant step in realizing the promise of our product roadmap and strategic plan we established in September 2015," says POET's CEO Dr Suresh Venkatesan. "This synergistic combination can provide our customers a broader range of differentiated photonics technologies. The resulting enhancement of our design, test and packaging capabilities also promises to optimize time-to-revenue for our customers. POET now has a larger product portfolio to enhance our mission of enabling integrated photonic products for our expanded end-markets," he adds.  

"DenseLight is tailor-made to solidify POET's goal of attaining a leadership position in III-V integrated optoelectronics technology development and manufacturing," comments DenseLight's chairman & CEO Jerry Rodrigues. "We at DenseLight are delighted to be an integral part of the POET family and to play a strategic role in the Company's growth plans in the rapidly developing III-V integrated opto-electronics market and particularly the exciting application demands for the Internet of Things (IOT)."

POET is executing the acquisition via a combination of stock and cash. A significant portion of the cash will be used to repay DenseLight's outstanding debt and other liabilities. POET expects to fund the purchase price of the acquisition with its cash on hand.

At closing of the transaction (which is expected to be on or before 10 May), DenseLight shareholders will be issued shares of common stock worth US$10.5m based on a deemed price for POET shares of the US equivalent of one Canadian dollar (CDN$1). Additional POET shares worth US$1m (based on the same equivalent share price) will be issued to the shareholders in the event that DenseLight meets or exceeds a pre-determined revenue target during calendar 2016.

Tags: POET

Visit: www.poet-technologies.com

Visit: www.denselight.com