Alliance Fiber Optic Products Inc (NASDAQ: AFOP)
Alliance Fiber Optic Products is having an incredibly strong day in the market today, and for good reason. The company announced that it is being acquired, and nothing causes movement in the market quite like mergers and acquisitions. Today, we’ll cover the details of the acquisition, how the stock reacted to the news, and what we can expect to see from AFOP moving forward. So, let’s get right to it…
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Corning Incorporated (GLW) Will Acquire Alliance Fiber Optic Products
As mentioned above, AFOP is climbing today as the result of news that it will be acquired. The company acquiring AFOP is Corning Incorporated. According to the announcement, the acquisition will happen in an all-cash deal under which GLW will pay AFOP $18.50 per share, bringing the value of the acquisition to about $305 million. This is a strong move for Corning because the company already uses a long list of AFOP products. Once the acquisition is complete, Alliance Fiber Optic Products will be integrated into Corning’s Optical Communications business segment. In a statement, Clark S. Kinlin, Executive Vice President at Corning Optical Communications, had the following to say with regard to the acquisition:
“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… And, it adds additional products that Corning can offer our broad customer base while providing an opportunity for manufacturing synergies.”
Following up on the statement above, Peter C. Chang, Founder and CEO at AFOP, had the following to offer:
“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 interest 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 its customers.”
How The Market Reacted To The News
As mentioned above, nothing seems to have quite the same ability to move the needle in the market like acquisitions, and we’re definitely seeing movement today. AFOP investors are seemingly incredibly happy with the premium the company was able to demand (over 30%). As a result, we’re seeing strong gains in the value of the stock at the moment. Currently (10:26), AFOP is trading at $18.44 per share after a gain of $2.97 per share or 19.24% thus far today.
What We Can Expect To See Moving Forward
In this particular case, the writing is written pretty clearly on the wall. AFOP investors will soon be receiving $18.50 per share, representing incredibly strong growth. From there, Alliance Fiber Optic Products will be melded into Corning, making Corning a stronger company. With that said, it may be smart for AFOP investors to re-invest the money into Corning. However, the way to play is up to you. All in all, this is great news for AFOP investors.
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What Do You Think?
How do you think the acquisition will benefit Corning? Let us know your opinion in the comments below!
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