Under private equity ownership, this is a particularly strong result. Most of these offerings are still in the early or mid-cycle selling phases with solid continuing momentum expected to the next few years.
The two companies’ highly complementary customer base also creates unique value. Specifically, we only overlap in one of the company’s Top-10 combined customers. In this single customer overlap, Coriant is an incumbent metro provider while Infinera is the incumbent long-haul provider.
This expanded and complementary customer base will also lower customer concentration and should dampen future risk related to potential customer consolidations. Ultimately this acquisition enables Infinera to achieve scale, expand its customer base and magnify the positive impacts of vertical integration. It represents a fantastic opportunity for both companies, their customers and for stockholders.
While we don’t have it baked into our expectations, we do see good opportunities for trials of new products and from customers who like the technology, but have been waiting to see Coriant’s ultimate path before making commitments.
Alex, so we worked with Oaktree who is the majority shareholder of Coriant to structure the deal where they take care of the outstanding debt liabilities as part of the transaction and none of those come across to us as part of the acquisition. So, there was a significant amount of debt on Coriant’s balance sheet. That will not come across to us.
Now when we look at the overall portfolio, so, Oaktree looked at this and said, hey, the way to really get value from their investment, right, was to be able to participate on the upside of this with the original thesis of, let’s get vertical integration in here. We see the deals. We see the innovation. We see the grippiness of the software and of what the team had developed over the last five year period.
I think that we are clearly planning on and have done a huge amount of work to validate that our ICE technology will fit into the Coriant platforms. I am – my engineers will tell me, they are 99% sure it will fit. They are 99% sure it will bring the costs and we are work exceptionally effectively. There is a 1% risk with that as it always is.
Yes, I think, as I – we talked about, they –Coriant has done a very good job of winning a lot of customers. Twenty so far this year. And they are bringing 100 unique customers to us. A lot of the Tier-1s, but they’ve also done a very good job of building an international business, 60% of their business is international as a combined company, so about 50-50. |
