Ciena Corporation, the network specialist, has entered into a definitive agreement to acquire Cyan Inc., a leading provider of next-generation software and platforms to enable open, agile and scalable software-defined networks. Under the terms of the agreement, Ciena will acquire all of the outstanding shares of Cyan in a cash and stock transaction currently valued at approximately $400 million (or $335 million, net of estimated cash acquired) and inclusive of Cyan’s outstanding convertible notes on an as…
Ciena Corporation, the network specialist, has entered into a definitive agreement to acquire Cyan Inc., a leading provider of next-generation software and platforms to enable open, agile and scalable software-defined networks. Under the terms of the agreement, Ciena will acquire all of the outstanding shares of Cyan in a cash and stock transaction currently valued at approximately $400 million (or $335 million, net of estimated cash acquired) and inclusive of Cyan’s outstanding convertible notes on an as-converted basis.
Cyan offers SDN, NFV, and metro packet-optical solutions, which have built a strong customer base that is complementary to Ciena. Cyan also provides multi-vendor network and service orchestration and next-generation network management software with advanced visualization. When combined with Ciena’s Agility software portfolio, Cyan’s next-generation software and platforms enable greater monetization for network operators through more efficient utilization of network assets and faster time-to-market with differentiated and profitable services.
“Ciena is transforming networks by applying web-scale technologies for delivering greater efficiency, network automation and agility while driving the industry toward an open ecosystem,” said Gary Smith, president and CEO of Ciena. “The addition of Cyan accelerates the availability of a complete solution for our customers to deliver virtualized networks and services on-demand.”
“Ciena and Cyan share the common belief that disruptive innovations and a customer-first approach are key ingredients to enable network transformation,” said Mike Hatfield, president of Cyan. “We are confident that our combined efforts will accelerate this transformation adding significant value for our customers.”
Transaction Terms and Timing
Upon the closing of the transaction, Cyan shareholders will receive consideration equal to the value 0.224 shares of Ciena common stock (89% of which will be delivered in Ciena common stock and 11% will be delivered in cash based on the value of Ciena common stock at closing). This exchange ratio represents $4.75 per share of Cyan common stock, based on Ciena’s 20-day volume weighted average price as of May 1, 2015. Based on the structure of the transaction, Cyan’s outstanding warrants will be deemed to have been automatically exercised upon closing. In addition, Ciena will also assume Cyan’s outstanding equity awards.
In connection with the acquisition, Ciena will assume Cyan’s $50 million in outstanding principal amount of 8.0% Convertible Senior Secured Notes due 2019. Under the terms of the indenture, for a period following closing, the note holders may elect to convert such notes at an increased conversion rate, or alternatively require that all or a portion of their notes be purchased for cash at a purchase price equal to the principal plus accrued interest. In the event that any note holders do not make either such election, such notes will become obligations of Ciena.
The transaction is expected to close during Ciena’s fiscal fourth quarter 2015 and is subject to certain approvals of Cyan stockholders, regulatory approvals in the U.S. and other customary approvals. The boards of directors of both Ciena and Cyan have approved the transaction. Certain officers and directors and affiliated stockholders, including investment funds affiliated with certain directors, collectively holding over 40% of the outstanding shares of Cyan, have signed voting agreements committing to support the merger.
Morgan Stanley & Co. LLC served as financial advisor and Hogan Lovells is serving as legal counsel to Ciena on this transaction. Jefferies LLC served as financial advisor and Wilson Sonsini Goodrich & Rosati is serving as legal counsel to Cyan.
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