Market Overview

Alliance Fiber Optic Products Skyrockets 20%, Co. To Be Acquired By Corning


Shares of Alliance Fiber Optic Products Inc (NASDAQ: AFOP) gained nearly 20 percent on Friday after Corning Incorporated (NYSE: GLW) announced its intention to acquire the company.

Corning said it entered into a definitive merger agreement with Alliance Fiber Optic. As part of the agreement, Corning will pay Alliance Fiber Optic shareholders $18.50 per share, valuing the company at approximately $305 million.

Shares of Alliance Fiber Optic closed for trading at $15.46 on Thursday, implying a 20 percent premium to Thursday's closing price and a 32 percent premium to the one month average closing price prior to the announcement.

Alliance Fiber Optic is a designer of fiber optic components and integrated modules. The company's products include devices that connect optical fibers and components, among others.

Corning intends to integrate Alliance Fiber Optic with its Optical Communications business segment to broaden its presence in Asia and realize product and cost synergies. Corning expects the acquisition to be accretive to its earnings per share during the first year.

"Combining AFOP's components expertise with Corning's broad portfolio of connectivity solutions further strengthens our position in the high-growth, cloud data-center market segment," said Clark S. Kinlin, executive vice president, Corning Optical Communications. "And, it adds additional products that Corning can offer our broad customer base while providing an opportunity for manufacturing synergies."

Peter C. Chang, AFOP founder and CEO, commented, "We are excited to join forces with Corning. We believe Corning's scale provides an excellent platform for our products to access a broader customer base and drive a higher level of growth than we would be able to achieve as a standalone company. Our board believes that this transaction is in the best interests of our stockholders and provides our stockholders with substantial cash value for their investment. In addition, we believe becoming part of a larger company with Corning's strong track record benefits both our employees and customers."


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