Infinera, provider of Intelligent Transport Networks has announced its intent to acquire Coriant, a privately held global supplier of open, hyperscale network solutions for $430 million.
The acquisition significantly scales the company as the next wave of global network spending begins, creating one of the world’s largest optical network equipment providers.
The combination positions Infinera to capitalize on the next wave of global network spending as network operators transform their networks to transition from 4G to 5G, from Optical Transport Network (OTN) to packet and from closed to open network architectures.
“Acquiring Coriant is a fantastic opportunity, strengthening our ability to serve the world’s largest network operators, accelerating our ability to leverage vertical integration and reinforcing our commitment to our long-term business model,” said Tom Fallon, Infinera CEO.
Pat DiPietro, CEO & Vice Chairman, Coriant said, “The combined company will benefit from Coriant’s significant investments in software automation and open, disaggregated solutions, which have gained significant traction and wide-scale adoption by customers around the world.”
The acquisition approximately doubles Infinera’s revenue and expands the company’s customer base to serve nine of the top 10 global network operators (five new to Infinera) and the top six global internet content providers (three new to Infinera).
The acquisition is expected to be substantially accretive in 2019. This accretion will come from $100 million of identified cost savings in both cost of goods sold and operating expenses. Total cost synergies of $250 million are expected through 2021, with the continuation of operating synergies and the introduction of vertical integration into the Coriant product line, resulting in a step-function increase in Coriant’s margins.
Combining the strengths of both companies creates a powerful new portfolio to support our customers’ transition from 4G to 5G, from OTN to packet and from closed to open network architectures.
Under the terms of the definitive purchase agreement governing the acquisition, subject to customary adjustments, Infinera will pay approximately $150 million in cash at closing, and estimated additional amounts of $25 million in the two quarters post-closing and $55 million over a period of years.
Infinera will issue approximately 21 million shares, which when combined with the cash consideration, results in total transaction consideration of approximately $430 million.
The acquisition is expected to close in the third quarter of 2018, subject to customary closing conditions. The board of directors of Infinera has unanimously approved the transaction.