Analog semiconductor solutions supplier M/A-Com Technology Solutions Holdings, Inc. (MTSI) inked a definitive agreement to acquire laser developer BinOptics Corporation, in an all-cash deal valued at $230 million. The deal is expected to fortify MACOM’s presence and expand its addressable market in the data center networks sector.
Ithaca, N.Y. – based BinOptics is a merchant provider of Indium Phosphide lasers for data centers, access networks, mobile backhaul and silicon photonics. Its edge-emitting and surface-emitting Fabry Perot and DFB lasers will expand MACOM's optical portfolio.
BinOptics’s integration into MACOM’s operations is expected to generate significant synergies as it leverages the former’s foothold in the optical component market and doubles its serviceable addressable market within the same. MACOM also plans to scale laser production capacity and propel market share gains in the lucrative end market.
MACOM expects the BinOptics buy to add to gross margin and earnings per share beginning from the first full quarter of combined operations. The transaction, subject to customary closing conditions, is expected to close by the end of its first fiscal quarter of 2015.
The acquisition is a part of MACOM’s expansion strategy via the inorganic route. Last November, MACOM had acquired Mindspeed Technologies, seeking to leverage on the latter’s high-growth, high-margin HPA (high performance analog) division as well as its cash-generating VoIP (Voice over Internet Protocol) business.
The strategy also includes divesting or restructuring underperforming businesses to enhance focus on its core competencies, which are the HPA, RF (Radio Frequency), and microwave and millimeter wave markets.
For instance, MACOM sold Mindspeed’s wireless infrastructure assets to Intel Corporation (INTC) in February. It also divested Mindspeed’s CPE communication processor division to Freescale Semiconductor, Ltd. (FSL) in May, further streamlining its operations in order to enhance focus on its core markets.
MACOM has had an impressive history of integrating acquisitions successfully and unlocking value through expanding margins and boosting profitability, and the BinOptics acquisition will deepen MACOM’s prowess in manufacturing cost-efficient, high-quality compound semiconductors in large volume.
MACOM presently sports a Zacks Rank #3 (Hold). A better-ranked semiconductor stock that looks promising is Montage Technology Group Limited (MONT), holding a Zacks Rank #1 (Strong Buy).
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