Infinera to buy Coriant for $430 million

Infinera announced that it is set to acquire Coriant, a supplier of network solutions, in a deal valued at $430 million.
The acquisition of Coriant will bring 5 top global telecom operators and 3 leading Internet content providers to Infinera. In addition, Infinera will be able to almost double its revenue through the strategic deal.

Infinera aims to capitalize on the 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, a market research agency, forecasts that optical network spending will reach $17.8 billion in 2022.

“Acquiring Coriant will be strengthening our ability to serve the world’s largest network operators,” said Tom Fallon, CEO of Infinera.

The acquisition approximately doubles Infinera’s revenue and expands customer base to serve 9 of the top 10 global network operators (5 new to Infinera) and the top 6 global internet content providers (3 new to Infinera).

The acquisition is expected to be substantially accretive in 2019. This accretion will come from $100 million of cost savings in both cost of goods sold and operating expenses. Total cost synergies of $250 million are expected through 2021.

Infinera will be acquiring a debt-free balance sheet and expects cash flows to pay back transaction consideration within three years.

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.

Infinera recently upgraded its portfolio based on the innovative Infinite Capacity Engine (ICE4). 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.

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 also issue approximately 21 million shares.

Coriant’s majority owner, Oaktree Capital Management, will own approximately 12 percent of the combined company.

Morgan Stanley & Co. served as financial advisor and Wilson Sonsini Goodrich & Rosati served as legal counsel to Infinera on this transaction. Moelis & Company served as financial advisor and Kirkland & Ellis served as legal counsel to Coriant.