News Article

Charlotte-Based Digital Optics Is Sold in $59.5M All-Cash Deal
Date: Jul 11, 2006
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Featured firm in this article: Digital Optics Corporation of Charlotte, NC

CHARLOTTE, N.C. -- Digital Optics, a company focused on micro-optics that was founded out of the University of North Carolina at Charlotte in 1994, is being sold.

Tessera Technologis (Nasdaq: TSRA) said Monday it would acquire privately held Digital Optics in a deal worth some $59.5 million. Digital Optics will operate as a subsidiary of Tessera, which is based in San Jose, CA. Its technology is used in semiconductor equipment optics, communications and photonics.

The firm's 100,000-square foot facility in Charlotte will be used as Tessera's Micro-Optics Center of Excellence. Digital Optics uses the facility for design, development and prototyping.

The company was co-founded by Michael Feldman. It has 83 employees, including 11 who have earned PhDs. Digital Optics holds 130 issued and pending patents in micro-optics and optical integration.

Feldman is chief technical officer of Digital Optics, a position he has held since 1998, and is chairman of the board. He was an assistant professor of electrical engineering at UNCC from 1989-1992. He earned his engineering degree at Duke University.

Kevin Drehmer, company president since 1999, earned his masters in business at the University of North Carolina and sits on the board of directors at the Ben Craig Center Incubator at UNCC.

Tessera, a provider of miniaturization technologies for the electronics industry, said Digital Optics technology would be used for camera phone and next-generation DVD markets.

"The Digital Optics team and key technology will be components in Tessera's development of low-cost, miniaturized imaging solutions for high-volume consumer optics applications, such as camera phones, next-generation DVD players and automotive applications," the company said in a statement.

The all-cash deal is expected to close in the third quarter.

"This acquisition provides an additional path to significant future growth for Tessera," said Bruce McWilliams, Tessera's chairman and chief executive officer, in a statement. "By leveraging our core competencies in building (intellectual property) businesses, we believe that by the end of the decade, we can develop a consumer optics IP business with licensing and royalty revenues of a similar scale to Tessera's current semiconductor packaging business.

"The Digital Optics technology and renowned team of experts in micro-optics, combined with our Shellcase wafer-level packaging resources, will strengthen Tessera's ability to provide key imaging solutions in a variety of high-growth, high-volume consumer optics applications such as camera phones," he added.

Tessera acquired Shellcase in 2005.

"Once the acquisition is completed, Digital Optics will become a wholly-owned subsidiary of Tessera," said Mike Forman, Tessera's interim chief financial officer. "Going forward, the Digital Optics business will be structured similarly to Tessera with revenue derived from licensing, royalties and services."

Tessera customers include some of the world's leading semiconductor companies, such as Intel, Toshiba and Texas Instruments.