Alphawave IP Group has acquired Banias Labs for $240 million

Alphawave IP Group has acquired Banias Labs for $240 million

LONDON, UK: Alphawave IP Group, a global leader in high-speed connectivity for the world’s technology infrastructure, 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 IP.

Alongside the acquisition of Banias Labs, Alphawave IP 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 IP 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.”

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.

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