It is definitely a friendly offer which I expect is very much being put into place to facilitate the rapid deployment of the Optical Interposer. I believe it has been in the works for a while. Recall the announcement of DenseLights participation with Palomar and the LUX Photonics consortium on the New Singapore Photonics Innovation Center.

SINGAPORE – November 27, 2018 – Palomar Technologies, a global leader in delivering total process solutions for advanced photonics and microelectronic device packaging, announced today the launch of its Innovation Center in Singapore. The launch is in partnership with the LUX Photonics Consortium1 and DenseLight Semiconductors, a division of POET Technologies, a developer and manufacturer of optical light source products.

POET did not PR the above participation which I found unusual. The sale of DenseLight may or may not be a reason why it was not announced?

As many of us will recall when the takeover offer by GaAs Labs was announced to acquire Anadigics for .35 a share and the details were made public. The agreement included a go shop period of 25 days to give Anadigics an opportunity to find a superior offer. Which as we will all recall ended up resulting in a bidding war with II-VI eventually being the successful buyer at .85 a share. The agreement also included break-up fees to be payed to GaAs Labs should a superior offer be successful. Check.

The offer that has been made to purchase DenseLight appears to have none of these elements.

It is both friendly and beneficial to all parties. As was pointed out by Suresh, POET anticipates being DenseLight’s biggest customers.

Beyond this  agreement I think  there is potential for  POET to  license the Optical  Interposer to customers which could  ultimately result in DenseLight also becoming a customer of the holder of any such license (unless POET maintains exclusive rights as the only buyer of  OI ready devices). That would necessitate DenseLight holding a license for the Optical Interposer active devices. How did Suresh reference the devices?  The company is now preparing to meet high-volume manufacturing requirements for Optical Interposer-based solutions, applying the active device designs successfully achieved at DenseLight, and exploring additional vertical markets beyond datacom.

The question then becomes…Who is buying DenseLight and is this the end game for them or just the beginning. In other words is it a first step toward the purchase of POET. Let’s not go there for now as I think we have enough to consider.

The confidentiality around the buyer makes me think it is a big company who if public would not require their shareholder approval. The reason for confidentiality is in my opinion that there is a concern of competing buyers who are looking for an interest in the Optical Interposer platform. Maybe, maybe but the no shop clause says that POET is happy with the offer and that the future relationship is good for POET.