GigOptix Inc., a supplier of high performance electronic and electro-optic components that enable next generation 40G and 100G optical networks, announced that it has signed a definitive merger agreement to acquire Endwave Corp., a provider of high frequency RF solutions and semiconductor products for the wireless mobile backhaul communications, satellite communications, electronic instruments, and defense and security markets. The combined company will retain the name GigOptix Inc. to become a high speed, high frequency leader for optical and wireless communications. The acquisition is expected to close in the second quarter of this year.
"I am very excited about the strategic merger of GigOptix and Endwave. Once complete, the combined company will be well positioned to be a leader in high speed communication components. We are set to offer solutions to both the optical and microwave RF front-ends that will drive continued growth and bring added value to our customers and stockholders," said Avi Katz, GigOptix's Chairman of the Board of Directors and Chief Executive Officer. "Responding to the core issue of increasing bandwidth to meet customer demand has shaped the technology advancements for both companies. By combining Endwave's extensive point to point microwave radio system knowledge and Monolithic Microwave IC (MMIC) product portfolio with GigOptix's portfolio of optical modulators and broadband amplifiers, it positions us to not only expand our market opportunities, but also enables us to increase our penetration of the existing customer bases and market segments. The combined company will be able to leverage Endwave's manufacturing and GigOptix's high speed fiber optic front end technology to provide cutting-edge solutions for next generation 100G and 400G drivers and electro-optic sub-systems."
Merger Highlights:
The merger will enable the combined company to:
• Address customers' growing needs for high speed solutions in both wireless mobile backhaul and optical networks by providing a one-stop-shop with a comprehensive solution portfolio to consolidate and simplify supply chains;
• Strengthen its financial performance with estimated post-merger consolidated cash of about $16 M after payment of closing expenses and severance, as well as enhance revenue and deliver operational cost savings beginning in 2011, reaching approximately $1 M per quarter in 2012;
• Strengthen the combined company's high speed design capabilities in both point to point radio and optical networks while providing advanced and low cost assembly, testing and production through Endwave's facility in Thailand;
• Leverage GigOptix's high speed broadband ICs, mixed signal technologies, and Thin Film Polymer on Silicon (TFPS™) technology and Endwave's MLMS™ system-on-chip technology to further increase the level of integration of electro-optical front-ends;
• Develop electro-optical systems-on-a-chip such as integrated drivers and modulators; electro-optical transceivers on a chip; and microwave photonic transceivers for base stations;
• Consolidate GigOptix's microwave products with Endwave's MMIC product line for commercial and military applications with the potential for expansion into the high speed instrumentation market;
• Strengthen the combined company's IC design capabilities in both GaAs and SiGe manufacturing processes, which will enable additional integration, functionality and cost reductions for products targeting microwave/millimeter wave and broadband fiber optic applications; and
• Strengthen the company's 40G, 100G and next generation 400G Surface Mount Technology (SMT) packaging capabilities by leveraging Endwave's expertise in millimeter-wave SMD packaging.
"The acquisition of Endwave, an acknowledged leader in high frequency point to point radio communication systems, confirms GigOptix's continuous commitment to support new generation communication networks," added Andrea Betti-Berutto, GigOptix's Chief Technology Officer. "In addition to the many technical synergies between high speed RF microwave and millimeter-wave radio and fiber optic network electronic designs, we see exciting growth opportunities for wireless mobile backhaul to build out the broadband communication infrastructure. Driven by increasing use of bandwidth intensive smartphones and services, the same market demands that force network operators to upgrade their optical equipment from 10 Gb/s to 40 Gb/s and 100 Gb/s and next generation 400Gb/s, force operators to upgrade their mobile backhaul equipment to higher frequencies into the 71 to 95 GHz E-band to support the increased bandwidth generated from cellular networks."
"We have a proven track record of successfully integrating acquisitions. As with all transactions based upon our initial 2007 Strategic Plan of inorganic and organic growth, this merger with Endwave is the next step in our long-term vision of building the industry's premier supplier of front end solutions for high speed optical and microwave RF communication links, based on solid financial foundations," said Katz. "We look forward to furthering our leadership position as the only pure play provider of electronic devices for high-speed fiber-optic and wireless communications covering all applications, all speeds and all distances. Adding Endwave's products and manufacturing capabilities to the GigOptix catalog will further simplify our customers' supply chain as we become the one-stop shop for solutions that address the demands of both the optical core and the mobile backhaul networks. The combined company will have a strong balance sheet with about $16 M of cash, a significant revenue base and together with the optimization of the sales, marketing, and operations teams we have a clear short term path to profitability."
Commenting on the merger, John Mikulsky, Endwave's President and Chief Executive Officer, said, "The merger of Endwave and GigOptix is an ideal combination of technology, opportunity and vision. As a combined company, I believe we can effectively build upon our technology leadership and success for a strong and exciting future. Together, we can deliver the most extensive and comprehensive product portfolio in the industry, providing customers with the highest quality yet cost-effective technology solutions. The Endwave team and I look forward to working with Dr. Katz and his team to achieve the next generation of success for the combined company."