NASDAQ listed, optical networking vendor, Infinera has announced its offer to acquire Transmode, a Stockholm, Sweden headquartered company which deals in metro packet-optical networking, through a recommended public offer to the shareholders of Transmode, said a statement from Infinera.
The Board of Directors of Transmode has unanimously recommended to Transmode’s shareholders to accept the offer. Pod Investment AB, the largest shareholder, which holds approximately 33% of the total shares and voting rights in Transmode, has undertaken to accept the offer subject to customary conditions, informs the company.
The offer is a cash plus shares valuation for existing Transmode shareholders, with a total valuation of roughly $350 million.
Under the terms of the offer, for every 10 shares of Transmode, shareholders will receive SEK 300 in cash and 4.705 Infinera shares.
The purchase price implies a price per share of approximately SEK 109, and a total equity value for Transmode of approximately $350 million.
In aggregate, Infinera will pay approximately $96 million in cash, funded from its balance sheet, and will issue approximately 13.0 million new Infinera shares to Transmode shareholders.
As of December 27, 2014, Infinera’s total cash holdings were approximately $391 million. Post-transaction, Transmode shareholders will own 8.7 percent of the combined company on a fully diluted basis.
The offer is expected to close in the third quarter of Infinera’s fiscal year 2015, subject to certain closing conditions, including acceptance by more than 90 percent of the total number of shares of Transmode and other customary conditions.
The transaction is expected to be neutral to slightly dilutive to Infinera’s non-GAAP earnings in the second half of 2015, and accretive to Infinera’s non-GAAP earnings in 2016.
Infinera is aiming to address the entire end-to-end WDM market and to capitalize on the transition of major 100G metro aggregation deployments expected by industry analysts to commence in 2016 by Transmode’s suite of metro core, edge and access solutions.
Transmode’s products provide set of application specific features including broadband aggregation, mobile backhaul and fronthaul along with business Ethernet MEF certifications.
“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.
Market analysts expect the 100G Metro market to accelerate in 2016. Anticipating that event, Infinera has previously announced its intentions to introduce a Metro Core Aggregation product by the end of 2015 that would address a portion of that market.
The combined company’s product portfolio will be able to address the breadth of the Metro market by the time major buying decisions commence, expect Infinera.
Experts are of the view that Infinera’s historical strength is in the North American long-haul market, while Transmode’s is in the European Metro market. The combined company will be able to more fully address the DWDM market and capitalize on the companies’ respective geographical strengths.
Infiner informs that for the near-term, it does not intend to make any material changes to Transmode’s employees or to Transmode’s existing organisation and operations, including the terms of employment and locations of the business.
According to the Infinera, each company’s engineering structure is anticipated to remain substantively intact and Infinera intends to have Transmode’s current CEO lead the Metro Aggregation business operations of the combined company.
For the long-term, the optimal structures of each function will be determined during the period following the completion of the offer and the creation of the combined company, after an assessment of the combined company’s optimal structure and staffing.
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