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Alphawave IP Group plc (“Alphawave” or “Company”) (LN:AWE), a global leader in high-speed connectivity for the world’s technology infrastructure today announced the acquisition of Banias Labs, an Israel-based optical Digital Signal Processing (“DSP”) chip developer for data centers for approximately US$240 million. The acquisition strengthens Alphawave’s roadmap of optical DSP silicon products for data centers, a core high growth market for Alphawave.
Alphawave IP Negotiates a Multi-Year Framework with a Leading North American Hyperscaler for a Potential Roadmap Delivering Over US$300 Million of Optical Products
Alongside the acquisition of Banias Labs, Alphawave has negotiated a non-binding, multi-year purchasing framework with a leading North American hyperscaler that proposes a multi-year roadmap for Alphawave to develop and sell a portfolio of optical products and DSPs, including coherent DSP technology from Banias Labs, with sales potentially ramping to over US$300 million.
Tony Pialis, President and Chief Executive Officer of Alphawave said: “Banias Labs optical DSP technology provides a strong strategic advantage for Alphawave, strengthening our roadmap of DSP silicon solutions for data centers. This acquisition enhances our portfolio of electrical and optical solutions in the most advanced process technologies. The multi-year purchasing framework includes coherent optical solutions, and with the Banias acquisition, Alphawave is expanding its total addressable market by delivering next generation coherent optical solutions for the most advanced data centers.”
John Lofton Holt, Executive Chairman of Alphawave said: “We are pleased to welcome the talented Banias Labs team to Alphawave. This acquisition aligns with the strategic priorities that we articulated at our IPO, expanding our technology portfolio in high-speed connectivity to support long-term growth. Coherent optics will enable the next level of efficiencies in data center communications, addressing the increasing bandwidth and power efficiency requirements.”
About Coherent Optics
Coherent optics is the next evolution of optical solutions, the cornerstone of the industry’s efforts to achieve 800G and 1.6T Ethernet speeds while maintaining the required reaches inside and outside of data centers and also significantly reducing power consumption. Coherent technology is predominantly used today in long reaches of over 100km connecting data centers and in telecommunications. Banias Labs’ optical DSP technology strengthens Alphawave’s optical products roadmap by targeting a growing opportunity for coherent optical technology intra-data center, as shorter reaches adopt this technology.
Furthermore, Alphawave believes the significant engagement from a leading North American hyperscaler reflects the importance of this technology for the future of data center connectivity.
Key Acquisition Highlights
Background on Banias Labs
Founded in 2020, Banias Labsis a leading provider of coherent optical DSP semiconductor technology. Based near Tel Aviv, Israel, the key core technology leaders have worked together for over two decades and have a long track record of success in the silicon, IP, and communications segments of semiconductors. Banias Labs currently has approximately 50 employees the majority of whom are R&D focused.
Banias Acquisition Closing Details
Alphawave has acquired 100% of the shares of Banias Labs for a total cash consideration of US$240 million paid upon closing.
The acquisition is funded out of existing cash and additional financing. Alphawave has obtained US$210 million of Senior Secured Credit Facilities, comprising a five-year US$110 million Revolving Credit Facility and a five-year US$100 million Term Loan. The Company’s Pro Forma net debt position after close is expected to be approximately US$35 million. Alphawave expects to continue to have a strong cash flow generation profile which combined with the additional facilities provides a solid platform to navigate this period of accelerated business expansion.
The Company expects the ramp of new Optical products to start in 2024 and profitability to improve from 2023 levels as products go into high-volume production and generate additional revenue. Alphawave anticipates additional revenue synergies given the complementary nature of the technology and its contribution to the product roadmap. Alphawave reiterates its stand-alone outlook. Further details on the pro forma 2023 outlook and the long-term financial model will be communicated at the upcoming capital markets day on 13 January 2023.
Trading for Q3 2022 has been strong and the Company will publish its trading update for Q3 2022 next week, on 17 October 2022.
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