M&A: Infinera buying Coriant

July 23, 2018
Infinera (NASDAQ:INFN) has announced its intent to acquire privately held Coriant. The acquisition is intended to create one of the world's ...

Infinera (NASDAQ:INFN) has announced its intent to acquire privately held Coriant. The acquisition is intended to create one of the world's largest optical network equipment providers and position 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. Ovum forecasts optical network spending to reach $17.8 billion in 2022.

Under the terms of the purchase agreement, 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.

To fund the cash requirements of the transaction, and to support future working capital requirements, Infinera plans to pursue debt financing from Morgan Stanley Senior Funding.

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.

"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. "This powerful combination immediately benefits our combined customers by delivering the innovative technology required for the next wave of network spending."

"Joining forces with Infinera accelerates our vision of transforming next-generation networks with best-in-class innovation," said Pat DiPietro, CEO and vice chairman of Coriant. "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 is expected to approximately double Infinera's revenue and expand 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).