Infinera has crafted a deal to acquire Sweden-based Transmode for $350 million, a deal that will help the vendor capitalize on the emerging growth in 100G metro aggregation deployments taking place at the largest service providers.
Under the terms of the agreement, Transmode shareholders will receive $34 cash and 4.71 Infinera shares for every 10 shares of Transmode held, valuing the company at $12.51 per share. The company said that is a 46 percent premium on Transmode's average share price in the past six months.
Infinera will pay a total $99 million cash and issue 13 million new shares. Transmode shareholders will own 8.7 percent of the combined company. Set to close in the third quarter, Transmode's board supports the bid and its largest shareholder Pod with 33 percent of shares also agreed to tender its stake.
Transmode's products mainly cover application specific features including broadband aggregation, wireless backhaul and fronthaul along with business Ethernet services.
Both companies bring something to the table in terms of geographic reach. Transmode has mainly been deployed by European service providers for metro applications, while Infinera has taken an active role in providing its DTN-X platforms long-haul and metro cloud applications, particularly with North America operators.
"The acquisition of Transmode accelerates the realization of our long held vision of providing an end-to-end portfolio of world class optical transport products. Further, the combination ensures we are well positioned to be a leading provider in the metro aggregation market as this market transitions to 100G," said Tom Fallon, CEO of Infinera, in a release announcing the deal. "Transmode's services-rich metro platforms, broad European customer base and profitable business model are naturally complementary to Infinera."
For Infinera, the timing of this acquisition could not be better, particularly as it looks to gain a larger stake in the 100G metro market, one that analysts have forecast will accelerate in 2016.
Infinera has previously said that it intends to introduce a metro core aggregation product by the end of 2015 that would address part of that market opportunity. By purchasing Transmode, the combined company's product portfolio will be able to address a number of metro market needs.
Evidence of this trend was highlighted recently when Verizon (NYSE: VZ) announced that it chose Ciena and Cisco as the packet optical transport system (POTS) vendors for its 100 metro network build.
As part of integrating Transmode into its fold, Infinera said it would bring Transmode's products and solutions under a common network umbrella, which would be Infinera's current suite of network and service management tools.
In addition, Infinera will work alongside with Transmode to port value-added technologies across each company's product lines. Such technologies may include, but are not limited to, PICs, analog DSPs, OTN switching/mapping ASICs, synchronization protocols and techniques, Ethernet and MPLS protocol stacks, optical system designs, service management tools, SDN controllers and others.
Besides product integration, Infinera said it will retain each company's engineering structure of both companies. Infinera also plans to have Transmode's current CEO, Karl Thedéen, lead the Metro Aggregation business operations of the combined company.
- see the release
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