Share prices for MRV Communications (NASDAQ: MRVC) tumbled more than 13 percent this morning after the company announced along with its subsidiary, Luminent Inc., has closed on its previously acquired company Fiberxon.According to the press release, the former stockholders of Fiberxon will be entitled to “receive a combination of cash, shares or MRV common stock, and a deferred consideration payment” with MRV assuming “all outstanding options to purchase shares of Fiberxon common stock.” In addition, MRV intends to combine Fiberxon with Luminent and will operate the business under a single management team.
MRV outlined the reasons for Fiberxon’s closing rather plainly in the press release, citing the latter company’s failure to produce its financial statements as a chief reason for the closing.
“Fiberxon had not been able to deliver to MRV and Luminent [it’s] audited financial statements for the periods specified under the Agreement and Plan of Merger,” the release stated. “After discussion with Fiberxon and Fiberxon’s auditors, MRV determined that Fiberxon’s audited financial statement were not currently deliverable and that Fiberxon and its auditors could not commit or estimate as to when such financial statements would be available.
“MRV’s board of directors considered the risks inherent in proceeding with the transaction … and concluded it was in the best interests of MRV and its stockholders to proceed with the … consummation of the transaction,” the release continued.
Despite the negative overtones of the release – and its subsequent plunge in share price – Noam Lotan, the president and CEO of MRV, was extremely optimistic about the closing.
“We are very excited about closing the acquisition of Fiberxon, and believe that its combination with Luminent creates one of the largest, most comprehensive manufacturers of optical transceivers for telecommunications networks,” Lotan said.
Share prices dropped from an opening price of $3.17 a share to $2.83 a share by mid-morning.