Intelligent transport network vendor Infinera, is to acquire Coriant, a privately held global supplier of open, hyperscale network solutions. The acquisition significantly scales Infinera as the next wave of global network spending begins, creating what the company claims will be one of the world’s largest optical network equipment providers. The combination positions Infinera to capitalise on the burgeoning 5G market as network operators transform their networks, which Ovum forecasts to be worth US$17.8 billion by 2022.
Infinera will pay approximately US$150 million in cash at closing and estimated additional amounts of US$25 million in the two quarters post-closing and US$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 worth US$430 million.
“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,” says 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,” says 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 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).
Infinera says the acquisition is expected to be substantially accretive in 2019. This accretion will come from US$100 million of identified cost savings in both cost of goods sold and operating expenses. Total cost synergies of US$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. Infinera will be acquiring a debt-free balance sheet and expects cash flows to pay back transaction consideration within three years.
For more information, visit www.infinera.com