API To Become Part Of Virginia Firm, HQ Leaving Ann Arbor

ANN ARBOR — Advanced Photonix Inc., a manufacturer of optical and electronic devices and test and measurement instruments, will become part of Blacksburg, Va.-based Luna Innovations Inc. under a merger agreement announced Monday.

The “merger” will result in API’s headquarters moving to Roanoke, Va., and Luna will be the surviving corporation. Luna CEO My E. Chung will be CEO of the combined company.

There was no immediate word on the fate of API’s Ann Arbor operations or employees.

Shareholders of API will receive 0.31782 shares of Luna stock for each share of API common stock they own under the deal, the companies announced.

Luna stock opened at $1.69 a share Monday and had fallen to $1.53 a share by 11 a.m., down 9 percent.

Based on Luna stock’s opening price and Advanced Photonix’s 37.38 million shares of stock outstanding, the deal values Advanced Photonix at $21.3 million. Based on the lower price the valuation is $18.2 million.

Luna manufactures fiber optic sensing and test-and-measurement products for the telecommunications, aerospace, automotive, energy, and defense markets.

The two companies said they would soon file a registration statement with the federal Securities and Exchange Commission containing details on the deal. The companies also said they would hold stockholder meetings for approval of the merger and issuance of Luna stock.

API had revenue of $29.9 million for the 12 months ended Sept. 30. Luna had revenue of $20 million for the same period.

The two companies’ announcement said the merged company would enjoy “improved profitability” due to “the cost savings resulting from a single public company infrastructure.”

The statement also said the combined company will have significant intellectual property protection for the many technologies in its product portfolio, with more 200 patents and patent applications.

The combined company will have a strong foundation from API’s optical product lines and Luna’s core test and measurement products, enabling continued investment in the growth of areas such as Luna’s strain and temperature sensing business and API’s receivers and detectors.

Additionally, the combined company plans to continue developing a pipeline of technologies for future commercialization in Luna’s Technology Development Division and API’s Terahertz operations.

“The merger of our two companies provides significant opportunity for growth,” API CEO Richard Kurtz said in a statement. “The combined product lines will strengthen the merged company’s position in the marketplace by offering more for each customer.”

The statement from Luna president and CEO My Chung said: “This merger will enable us to provide even greater capability across a broadened market base, providing improved opportunity for growth. Joining forces with a company like API will help us accelerate our path to profitability.”

Added API board chairman Donald Pastor: “We look forward to working with Luna to create a dynamic company with greater potential. We are very proud of the technology, products and markets that we’ve developed at API, and are excited at the prospect of what we may be able to do together with the talented team at Luna.”

The companies said Luna’s board of directors will be expanded to seven seats (6 independent directors plus the CEO) and will be composed of three directors designated by Luna’s board of directors, who will include Richard W. Roedel as chairman, John B. Williamson III and Michael W. Wise (all of whom currently serve on the board of Luna), and three directors designated by API’s board of directors, who will include Donald Pastor, API’s non-executive chairman, and Gary J. Spiegel and Ed J. Coringrato Jr. Spiegel and Coringrato, who have no prior association with API, formerly served as the senior vice president of Newport Corp., an Irvine, Calif.-based maker of laser and optical components, optical filters and gratings, spectroscopic and photonic instruments and devices, and the CEO of CyOptics Inc.,, Breinigsville, Pa.-based maker of optical components, ¬†respectively.

To listen to a recording of a conference call discussing the transaction, visit www.advancedphotonix.com.

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