MRV Announces Closing Of Fiberxon, Inc. Acquisition

Company Updates Guidance for Q207

Chatsworth, CA - MRV Communications, Inc. and its wholly owned subsidiary, Luminent, Inc., today announced that MRV closed its previously announced acquisition of Fiberxon, Inc., effective July 1, 2007. As a result, the former stockholders of Fiberxon are entitled to receive a combination of cash, shares of MRV common stock, and a deferred consideration payment, and MRV assumed all outstanding options to purchase shares of Fiberxon common stock on a basis that preserves the intrinsic value of such options. As previously announced MRV intends to combine Fiberxon with Luminent and operate the combined business under a single unified management team.

Commented Noam Lotan, President and CEO of MRV, "We are very excited about closing the acquisition of Fiberxon, and believe that its combination with Luminent creates one of the largest, most comprehensive manufacturers of optical transceivers for telecommunications networks. The combined company is expected to be a leader in providing BPON, GPON and GE-PON transceivers for the fast growing FTTX market and will also have a strong position in supplying metro transceivers including the rapidly expanding 10-gig opportunity."

Near Margalit, CEO of Luminent, stated "We are dedicated to integrating Fiberxon and Luminent and believe the combination of the two companies addresses our customers' growing need for optical component suppliers that provide a broader range of solutions, continued device innovation and competitive prices. The addition of Fiberxon allows us to significantly increase customer diversification and expand our presence in lower cost Asian manufacturing operations. In addition, the consolidation of our supply chains, manufacturing lines and technical expertise should reduce the cost of production through economies of scale and increased productivity. We also believe the unification of the two senior management teams will strengthen the combined company providing an experienced leadership team focused on capitalizing on the many opportunities in front of us."

Prior to the closing, on June 26, 2007, the parties to the acquisition amended the Agreement and Plan of Merger to provide for certain stock transfer restrictions, to adjust the timing of the deferred consideration payment and the duration of the related set-off period during which MRV may seek recourse for certain fees and expenses from the Fiberxon stockholders, and to adjust and/or remove certain closing conditions. Most significantly, MRV agreed to remove the delivery of Fiberxon's audited financial statements for the 2004, 2005, and 2006 fiscal years as a closing condition. While prior to the execution of the amendment Fiberxon had been able to fulfill substantially all of its closing conditions, Fiberxon had not been able to deliver to MRV and Luminent Fiberxon's audited financial statements for the periods specified under the Agreement and Plan of Merger. After discussion with Fiberxon and Fiberxon's auditors, MRV determined that Fiberxon's audited financial statement were not currently deliverable and that Fiberxon and its auditors could not commit or estimate as to when such financial statements would be available. MRV's board of directors considered the risks inherent in proceeding with the transaction in the absence of Fiberxon's audited financial statements and concluded that it was in the best interests of MRV and its stockholders to proceed with the amendment to the Agreement and Plan of Merger and consummation of the transaction.

Under Securities and Exchange Commission regulations applicable to companies, like MRV, which are obligated to file current and periodic reports under the Securities Exchange Act of 1934, MRV is required to file the audited financial statements of any material business that it acquires within 75 days of the closing date of the acquisition. If MRV does not receive the audited financial statements within the required period the company may face significant consequences, including, among others, possible delisting of its common stock from The Nasdaq Stock Market for violation of its listing rules requiring that Nasdaq listed companies to comply with any obligation of any person regarding filing or disclosure of information material to the issuer or its Nasdaq listed security, whether such obligation arises under the federal securities laws or the rules and regulations promulgated thereunder or other applicable federal or state statutes or rules. Further, if MRV does not receive and file the necessary Fiberxon financial statements within the required period it faces additional risks that may negatively affect its operations and financial condition, such as experiencing a default on its outstanding convertible notes requiring accelerated repayment or conversion, and an inability to use Form S-3 when registering securities, including for any post-effective amendments of existing effective registration statements. A more complete discussion of these risks related to the closing of the acquisition in the absence of the Fiberxon audited financial statements is included in MRV's Current Report on Form 8-K filed on July 2. 2007.

Continued Mr. Lotan, "Despite Fiberxon's difficulties in providing us with audited financial statements prior to closing, we believe that its fundamental business is sound, its employees are committed and enthusiastic, and that its presence in the People's Republic of China provides MRV and Luminent a key strategic advantage."

Merriman Curhan Ford & Co. acted as financial advisor to MRV Communications, Inc. on the acquisition of Fiberxon.

SOURCE: MRV Communications