Infinera agreed to acquire privately-held Coriant, creating one of the world’s largest optical network equipment providers. 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. Coriant’s majority owner, Oaktree Capital Management, will be compensated largely in stock. Post-transaction, Oaktree will own approximately 12 percent of the combined company on a fully diluted basis.
Infinera said the acquisition significantly scales the company as the next wave of global network spending begins as operators transform their networks from 4G to 5G, from Optical Transport Network (OTN) to packet and from closed to open network architectures. The company also says its vertically integrated business model delivers higher performance at lower cost for customers and higher profit margins for stockholders. 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).
“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 companies also noted:
- Coriant invested nearly $1 billion in research and development over the last five years to significantly advance its portfolio to address the growing demand for software automation and open, disaggregated platforms.
- Approximately 70% of Coriant's product revenue in 2017 (~80% projected in 2018) came from solutions that are new or have been refreshed in the last three years.
- Coriant has over 80 trials in progress or have been completed to date in 2018 for Coriant’s suite of new products and automation tools.
- Coriant’s SDN orchestrator Maestro has been deployed operationally at one of the two largest Tier 1 service providers in North America.
- Coriant has added more than 20 new customers to date in 2018, seven of which are driving more than $1 million in annual revenue.
- Infinera recently upgraded its portfolio based on its Infinite Capacity Engine (ICE4).
- The acquisition is expected to close in the third quarter of 2018, subject to customary closing conditions.
Coriant was formed in 2013 by private equity firm Marlin Equity Partners, combining Nokia Siemens Networks, Tellabs and Sycamore Networks.
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Coriant announces CEO change
DiPietro will continue to serve as Vice Chairman of the Board, a role he has held since the founding of Coriant in 2013. DiPietro previously held senior leadership roles at Nortel and Bell Northern Research. He also previously served as Managing Partner at Canada’s VG Partners, overseeing the company’s Technology Fund. As a venture capitalist, he managed large portfolios and teams and sat on numerous Boards, including Sandvine, SiGe, Continuous Computing, BTI Systems and BelAir Networks.Coriant also announced that Reza Ghaffari has been promoted to the role of Chief Operating Officer (COO), a new position within Coriant. Ghaffari will continue to lead Coriant’s global service and support organization, while assuming responsibility for the company’s global IT, human resources, and facilities functions. Between 2000 and 2005, Ghaffari also worked at Verizon where he was responsible for innovation, product development, and strategic partnership programs.
