NEW YORK (TheStreet) -- Shares of Oplink Communications (OPLK) are climbing higher by 13.74% to $24.17 at the start of trading on Wednesday, after the company announced it will be acquired by Koch Industries' wholly owned subsidiary Koch Optics for approximately $445 million.
Oplink Communications, a company that designs, manufactures, and sells optical networking components and subsystems, said Koch Optics "will commence a tender offer and subsequent merger for all outstanding shares of Oplink common stock for $24.25 per share."
The offer represents a 26% premium to the average closing price for the 30-days preceding the announcement, Oplink said.STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.
Molex, a Koch Industries subsidiary and global electronics components company, will manage Oplink, as the transaction will "significantly expand Molex's fiber optic capabilities for technology development and new product innovation, Molex senior VP Tim Ruff said.
"This compelling transaction provides our shareholders with immediate and substantial cash value for their investment," Oplink CEO Joe Liu said.
Separately, TheStreet Ratings team rates OPLINK COMMUNICATIONS INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate OPLINK COMMUNICATIONS INC (OPLK) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance and growth in earnings per share. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- OPLK's revenue growth has slightly outpaced the industry average of 4.3%. Since the same quarter one year prior, revenues slightly increased by 4.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
- OPLK has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 4.95, which clearly demonstrates the ability to cover short-term cash needs.
- Powered by its strong earnings growth of 118.18% and other important driving factors, this stock has surged by 29.64% over the past year, outperforming the rise in the S&P 500 Index during the same period. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
- OPLINK COMMUNICATIONS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, OPLINK COMMUNICATIONS INC swung to a loss, reporting -$0.08 versus $0.69 in the prior year. This year, the market expects an improvement in earnings ($1.49 versus -$0.08).
- Net operating cash flow has declined marginally to $4.32 million or 2.59% when compared to the same quarter last year. Despite a decrease in cash flow OPLINK COMMUNICATIONS INC is still fairing well by exceeding its industry average cash flow growth rate of -31.82%.
- You can view the full analysis from the report here: OPLK Ratings Report