MRV Communications (MRVC) Reports Q2 EPS of $0.03; Enters Agreement to Sell Tecnonet

MRV Communications (NASDAQ: MRVC) reported Q2 EPS of $0.03, versus ($0.22) reported last year. Revenue for the quarter came in at $42.7 million, versus $43.1 million reported last year.

MRV also announced that it entered into an agreement on August 7, 2015 to sell Tecnonet S.p.A., its Network Integration subsidiary based in Rome, Italy, to Maticmind S.p.A. based in Milan, Italy for total consideration of €19.7 million or approximately $21.4 million based on the current exchange rate of 1.09 USD/€.

The consideration includes a cash payment by Maticmind to MRV of €15.6 million at closing plus a cash payment by Tecnonet to MRV of €4.1 million prior to closing to repay an outstanding intercompany obligation. MRV is entitled to seek and procure third party debt financing for Tecnonet to provide the funds for this payment, and Maticmind is obligated to assume this debt at closing. Within 60 days of closing, the parties are required to make a post-closing adjustment based on changes in debt and cash of Tecnonet between June 30, 2015 and closing, as provided for in the purchase agreement. The transaction is subject to stockholder approval at a special meeting to be held as promptly as reasonable on or before November 30, 2015.

“The sale of the Network Integration business will enable us to focus all of our energy in support of our vision as an end-to-end packet and optical networking solutions provider,” stated MRV President and Chief Executive Officer Mark Bonney. “The timing of this transaction aligns well with our plans for the Network Equipment business as increasing bandwidth demand for cloud, mobility and video services is accelerating market growth. Our product development investments over the past few years have produced industry-leading solutions. OptiPacket™, OptiDriver™ and OptiSwitch™ are gaining traction with new and existing customers. With these products, coupled with our low fixed cost operations and a culture of business process simplification, we are improving operating efficiencies continually and driving toward a sustainable and profitable business model.”

Kenneth Traub, Chairman of the Board of MRV, added, “This transaction is an important milestone for MRV. We are very pleased to have an agreement now to sell our final network integration business at an attractive valuation. This transaction not only strengthens MRV’s balance sheet, but also creates a more focused company with great growth potential with our new Network Equipment product line. We would like to thank Giuliano Maurizi, and the rest of the Tecnonet team, for their many years of loyalty and dedication as part of the MRV family. We look forward to executing on our strategy to capitalize on the value of the network equipment business under Mark Bonney’s leadership.”

The closing of the transaction, which is expected to occur during the fourth quarter of 2015, is subject to customary closing conditions and regulatory approvals, as well as the approval of MRV Communications, Inc.’s shareholders. The company has issued a Form 8-K that describes the transactions in greater detail. For reporting purposes, the company’s financial statements will include the Network Integration business until MRV shareholders approve the transaction.

For MRV, Norton Rose Fulbright LLP served as legal advisors and Stout Risius Ross, Inc. provided a fairness opinion to the board of directors. For Maticmind S.p.A., DLA Piper Italy served as legal advisors and Mazars S.p.A. and Studio Gnudi served as financial advisors.

For earnings history and earnings-related data on MRV Communications (MRVC) click here.

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