The Lightwave Blog

Posted by Stephen Hardy

Paul Bonenfant, communications components analyst at Morgan Keegan & Co., reports that Avanex filed an 8-K after the market closed last night revealing that the compensation committee of the board of directors had approved "change in control agreements" for the CEO (which, as of November 18, is now officially Giovanni Barbarossa, who also serves as company president and member of the board), senior vice presidents of sales and operations, and other VPs (including the interim CFO). The agreements are meant to provide incentives for these executives to remain with the company upon change of control -- in other words, if it's sold or merged.

This led Bonenfant to wonder if the much discussed hook up with Bookham is on again. He points out that while the combination looks good on paper, it would hold execution risks for Bookham and likely would delay its move toward profitability (as if the current economic situation hadn't done that already).

On top of Bonenfant's concerns, I recall that Bookham chief Alain Couder has repeatedly told me that if he gets involved in M&A;, it will be to move into new markets. "My experience in merging two companies with similar product lines in the same market is catastrophic," he told me once. And while the overlap between Avanex's and Bookham's activities isn't 100%, there would be a lot of redundancy in amplifiers and transceivers, as well as in the markets served. (Couder also discussed his M&A; philosophy during a video interview at OFC/NFOEC.)

So if the Bookham/Avanex marriage hasn't happened yet, it may be because Bookham is looking for something else in a partner.

Labels: Avanex, Bookham, mergers and acquisitions