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EMCORE Corporation, a provider of compound semiconductor-based components, subsystems and systems for the fiber optic and solar power markets, announced that it has signed a share purchase agreement to create a joint venture with Tangshan Caofeidian Investment Corporation, a Chinese investment company located in Caofeidian Industry Zone, Tangshan City, Hebei Province of China.

 

According to the agreement, TCIC will purchase a 60 percent interest in EMCORE's (News - Alert) Fiber Optics business, excluding its satellite communications and specialty photonics fiber optics product lines, which will be operated as a joint venture once the transaction is closed. The new joint venture entity, EMCORE Fiber Optics, Limited, will be registered in Hong Kong. TCIC shall pay EMCORE approximately $27.8 million and provide an additional funding of $27 million to EFO after the closing.

 

The Fiber Optics businesses included in this transaction are EMCORE's telecom, enterprise, cable TV, fiber-to-the-premises and video transport product lines. EMCORE will retain the satellite communications and specialty photonics fiber optics product lines and the satellite and terrestrial solar businesses.

 

Also, EMCORE's Executive Chairman and Board Chairman Reuben F. Richards, Jr. will resign his position as executive chairman of EMCORE and will assume the role of CEO for EFO. Tangshan Caofeidian Investment Corporation nominated Dr. Yi Li as chairman for EFO and TCIC will name a replacement subsequent to the closing.

 

The joint venture will aim on developing a high volume, low cost manufacturing infrastructure and a local customer support organization to better serve the expanding customer base in China and worldwide.

 

"This is one of the most transformational transactions in the history of EMCORE," Dr. Hong Hou said. "This transaction creates two well capitalized, industry-leading companies within their respective industries and will enable EMCORE to focus on growing its photovoltaic and defense/homeland security businesses. This strategy was put into motion more than two years ago by our Board of Directors. We are very pleased to be entering into this joint venture with TCIC and look forward to continuing to expand our Fiber Optics business and creating value for our shareholders."

 

“EMCORE's advanced technology, broad product portfolio, and high-quality customer base are very impressive,” Wenhong Tang, vice mayor of Tangshan City said. “TCIC plans to provide a competitive fulfillment infrastructure and expand the JV's customer penetration in Asia by strengthening the China operation.”

 

“EMCORE's Fiber Optics business is a great platform for future growth through accelerated new product development,” he said. “We are committed to providing the resources needed to achieve this vision.”

 

"This recapitalization allows the Fiber Optics business to aggressively expand its business penetration to major OEM customers worldwide, and accelerate new products to market. In addition to the organic growth, we will also pursue other strategic growth opportunities in the form of acquisitions to expand our business," Richards said.

 

Also in the joint venture, EMCORE and TCIC signed for supplemental agreement pursuant to which EMCORE agrees to establish its China terrestrial concentrator photovoltaics manufacturing and operations base in Caofeidian Industry Zone.