POET receives US$26–30m offer for DenseLight subsidiary

POET Technologies Inc of Toronto, Canada and San Jose, CA, USA — a designer and manufacturer of optoelectronic devices, including light sources, passive waveguides and photonic integrated circuits (PIC) for the sensing and datacom markets — has signed a non-binding letter of intent (LOI) to sell its Singapore-based DenseLight subsidiary.

Key terms include a proposed cash consideration of US$26–30m (C$34.5–40m), including a US$4m (C$5.3m) earn-out provision, no-shop and confidentiality clauses, and an undertaking to enter into key operating agreements, including a preferred supply agreement and a long-term strategic cooperation agreement. Definitive transaction agreements are expected to be signed on or before 15 September. The broad terms of the letter of intent and the consummation of any transaction are subject to further due diligence, the negotiation of definitive agreements and obtaining required approvals by all parties, including but not limited to the TSX Venture Exchange and a majority of POET’s shareholders.

Acquired by POET in May 2016 for US$10.5m in common stock, DenseLight has been engaged primarily in developing new sensing and datacom products, including active devices for POET’s Optical Interposer platform. DenseLight’s annual sales of LEDs and other light sources, along with contract engineering for third parties, has grown from $1.9m (C$2.5m) in 2016 to US$3.8m (C$5.1m) in 2018.

Since the introduction of its Optical Interposer technology in January 2018, POET’s development has expanded to optical waveguide designs fabricated by its manufacturing partner based in Malaysia and on novel packaging techniques related to the Optical Interposer. As the centerpiece of its growth strategy, POET will retain ownership of all the Intellectual Property unique to the Optical Interposer. The firm is now preparing to meet high-volume manufacturing requirements for Optical Interposer-based solutions, applying the active device designs achieved at DenseLight, and exploring additional vertical markets beyond datacoms.

“This offer, and the anticipated agreements, once completed, represent a compelling opportunity to leverage our assets and inject non-dilutive capital into POET,” believes CEO Dr Suresh Venkatesan. “The deal further allows POET to pursue a ‘fab-light’ strategy with a less capital-intensive business model that is focused on growing the Optical Interposer business through targeted investments in the design, development and sale of vertical market solutions,” he adds. “At the same time, a well-funded partner capable of making investments in both DenseLight and in additional manufacturing capacity will both support the anticipated ramp of POET’s Optical Interposer and transform DenseLight into a world-class manufacturer with global market reach. In addition to being one of its potentially largest customers, we expect to remain engaged with DenseLight and its partner over the long term for the benefit of both companies.”

See related items:

POET’s revenue grows over 20% in Q3/2018

Almae to co-develop laser modules based on POET’s optical interposer platform for high-speed datacoms

POET partner with 8” silicon foundry SilTerra Malaysia to develop and manufacture Optical Interposer Platform

POET introduces Optical Interposer Platform for co-packaging of electronic and optical components

POET completes acquisition of DenseLight

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