Optical networking vendor Ciena plans to acquire two companies working in the fibre optic realm -- switch maker Lightera Networks and Omnia Communications, a supplier of transport and access products -- in a stock swap valued at $US980 million.
Ciena will acquire the companies in two separate deals and will merge them into a new venture called The Ciena LightWorks Initiative, which will play an integrated fibre optic offering to telecommunications service providers, Ciena officials said.
Ciena provides fibre-optic network equipment based on dense wavelength division multiplexing (DWDM) technology to telecom operators. DWDM can dramatically increase the capacity of fibre-optic cables since it can transmit multiple streams of information through the same fibre cable.
Acquiring the two companies will allow Ciena to expand its product line to offer complete optical networking products, the company said.
Under terms of the separate agreements, Ciena will acquire all outstanding shares of Lightera in exchange for 20.6 million shares of Ciena common stock. The company will pick up all outstanding shares of Omnia for 16 million of its own shares. Based on the closing price of Ciena stock on March 12, the Lightera deal is valued at $552 million and the Omnia transaction is valued at $429 million, Ciena officials said.
Cupertino, California-based Lightera's main product, due out for the first time in the second half of this year, is Core Director, an intelligent optical core switch that provides high-capacity switching, as well as protection and restoration capabilities. Meanwhile, Omnia offers the AXR 500, a transport platform that uses packet and cell technology to allow carriers to deliver high-speed data services over fibre optics, while continuing to offer existing voice and leased-line services.
The boards of directors at Ciena, Lightera and Omnia have already approved the transactions, and Lightera shareholders have given their go-ahead as well. Meanwhile, shareholders holding 70 per cent of Omnia stock have agreed to approve the transaction at an upcoming shareholder meeting, Ciena said. Subject to regulatory approvals, Ciena expects the Lightera deal to be complete either later this month or in April, and the Omnia transaction to close in June or July.
Following the completion of the transaction, Ciena will reorganise into three operating units, each representing the current businesses of Ciena, Lightera and Omnia, the company said. Jagdeep Singh, president and chief executive officer of Lightera, will assume the role of division president for the unit formed by Lightera's business, while Michael Champa, president and CEO of Omnia, will take on the same role at the head of the Omnia business unit.
Ciena's last attempt at a merger, with Synchronous Optical Network (SONet)/Synchronous Digital Hierarchy (SDH) vendor Tellabs, went sour after Ciena's stock price dived to an all-time low in September. The failed merger would have been a large one, valued at $US7 billion in stock, but Tellabs backed out when Ciena's market performance declined sharply.