UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
July 23, 2018

INFINERA CORPORATION
(Exact name of registrant as specified in its charter)

 
					
Delaware	 	001-33486	 	77-0560433	
(State or other jurisdiction
of incorporation)	 	(Commission File Number)	 	(IRS Employer
Identification No.)	
140 Caspian Court
Sunnyvale, CA 94089
(Address of principal executive offices, including zip code)
(408) 572-5200
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)	
 
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)	
 
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))	
 
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))	
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company  ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

Item 1.01	Entry into a Material Definitive Agreement.	
On July 23, 2018, Infinera Corporation, a Delaware corporation (the “ Company ”), entered into a Unit Purchase Agreement (the “ Purchase Agreement ”) with Coriant Investor LLC, a Delaware limited liability company (“ Seller ”) and Oaktree Optical Holdings, L.P., a Delaware limited partnership (“ Lender ”). Pursuant to the terms of the Purchase Agreement, the Company will purchase from the Seller 100% of the issued and outstanding limited liability company interests (the “ Units ”) of Telecom Holding Parent LLC, a Delaware limited liability company and a wholly-owned subsidiary of the Seller (such company, “ Coriant ,” and such purchase, the “ Acquisition ”).
Pursuant to the terms of the Purchase Agreement, upon consummation of the Acquisition, the Seller shall sell and transfer to the Company, and the Company shall purchase from Seller, all of the Units. In consideration therefore, the Company will pay an aggregate amount of consideration consisting of approximately $230 million in cash and 21 million shares of Company common stock, subject to certain customary adjustments. Substantially all such consideration shall be paid or delivered, as applicable, to the creditors of Coriant and its subsidiaries, including the Lender, in satisfaction of certain obligations owed thereto by such persons. The cash portion of the amounts payable in the Acquisition is expected to be financed with a combination of new debt and cash on the Company’s balance sheet. In connection with its entry into the Purchase Agreement, the Company obtained a commitment from Morgan Stanley Senior Funding, Inc. for a $200 million senior secured bridge facility, subject to customary conditions.
In connection with the signing of the Purchase Agreement, certain key service providers of Coriant have entered into employment and/or consulting arrangements with the Company and its subsidiaries (including, following the closing of the Acquisition, Coriant), to become effective upon the consummation of the Acquisition.
Consummation of the Acquisition is subject to customary closing conditions, including, without limitation, the absence of certain legal impediments, the expiration or termination of the required waiting periods under certain antitrust, competition or other similar laws (including the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended) and the performance of certain covenants and agreements.
The Purchase Agreement contains representations, warranties and covenants of the Company, Seller and Lender that are customary for a transaction of this nature, including among others, covenants by the Seller regarding the conduct of Coriant’s business during the pendency of the transactions contemplated by the Purchase Agreement, public disclosures and other matters.
The Acquisition is anticipated to close in the Company’s third fiscal quarter ending September 29, 2018.
The Purchase Agreement contains certain termination rights for both Company and Seller including, for example, (i) the failure to consummate the Acquisition prior to the six-month anniversary of the signing of the Purchase Agreement, (the “ Termination Date ”), provided that such Termination Date will be automatically extended for three months if matter giving rise to the failure of such condition is related to the approval under the HSR Act or any Foreign Competition Law and (ii) a permanent injunction or order being issued prohibiting the consummation of the Acquisition.
The foregoing description of the Purchase Agreement and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Purchase Agreement, which will be subsequently filed. In particular, the assertions embodied in the representations and warranties contained in the Purchase Agreement are qualified by information in a confidential Disclosure Schedule provided by Seller to the Company in connection with the signing of the Purchase Agreement. This confidential Disclosure Schedule contains information that modifies, qualifies and creates exceptions to the representations and warranties set forth in the Purchase Agreement. Moreover, certain representations and warranties in the Purchase Agreement were used for the purpose of allocating risk between the Company and Seller rather than establishing matters as facts. Accordingly, you should not rely on the representations and warranties in the Purchase Agreement as characterizations of the actual state of facts about the Company or Coriant.
Cautionary Notice Regarding Forward-Looking Statements
This report contains forward-looking statements related to the Company, Coriant and the acquisition of Coriant by the Company that involves substantial risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed or implied by such statements. These statements are subject to numerous risks and uncertainties. These risks and uncertainties include, but are not limited to, the following: the timing to consummate the
 
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proposed acquisition; the risk that a condition to closing of the proposed acquisition may not be satisfied; the risk that a regulatory approval that may be required for the proposed acquisition is not obtained or is obtained subject to conditions that are not anticipated; the parties’ ability to achieve the synergies and value creation contemplated by the proposed acquisition; the parties’ ability to promptly and effectively integrate the businesses of the Company and Coriant, including unexpected transaction costs, including the costs of integrating operations, severance, professional fees and other expenses; the diversion of management time on issues related to the acquisition; the failure to consummate or any delay in consummating the acquisition for other reasons; changes in laws or regulations; the risks of customer and employee loss and business disruption, including, without limitation, as the result of difficulties in maintaining relationships with employees; increased competitive pressures and solicitations of customers and employees by competitors; the difficulties and risks inherent with entering new markets; and changes in general economic conditions. For additional information concerning factors that could cause actual conditions, events or results to materially differ from those described in the forward-looking statements, please refer to the factors set forth under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s most recent Annual Report on Form 10-K, filed with the Securities and Exchange Commission (the “ SEC ”) on February 28, 2018 and its Quarterly Report on Form 10-Q filed with the SEC on May 10, 2018. Additional information will also be set forth in the Company’s future Quarterly Reports on Form 10-Q, Annual Reports on Form 10-K and other filings that the Company makes with the SEC. The Company disclaims any obligation to update information contained in these forward-looking statements whether as a result of new information, future events, or otherwise.
 
Item 2.02	Results of Operations and Financial Condition.	
See the disclosure under Item 7.01 of this Current Report on Form 8-K.
 
Item 3.02	Unregistered Sales of Equity Securities.	
See the disclosure under Item 1.01 of this Current Report on Form 8-K. In connection with the proposed acquisition of Coriant described in Item 1.01 above, the Company has agreed to issue shares of the Company’s common stock to the Lender in accordance with the terms and subject to the conditions set forth in the Purchase Agreement. This issuance of shares will be made in reliance on one or more exemptions or exclusions from the registration requirements of the Securities Act of 1933, as amended (the “ Securities Act ”), including Section 4(a)(2) of the Securities Act, Regulation D promulgated and the exemptions from qualification under applicable state securities laws.
 
Item 7.01	Regulation FD Disclosure.	
On July 23, 2018, the Company issued a press release announcing the entry into the Purchase Agreement as well as updating its expectations for certain second quarter of 2018 financial results. The text of the press release is attached as Exhibit 99.1 and is incorporated herein by reference.
 
Item 9.01	Financial Statements and Exhibits.	
 
(d)	Exhibits.	

Exhibit No.	  	Description	
		
99.1	  	Press Release of Infinera Corporation, dated July 23, 2018.	
 
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	 		 		 	INFINERA CORPORATION	
				
Date: July 23, 2018	 		 	By:	 	/s/ JAMES L. LAUFMAN	
	 		 		 	James L. Laufman	
	 		 		 	Senior Vice President, General Counsel and Secretary	
 
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Exhibit 99.1

Infinera Scales for Next Wave of Global Network Spending –
Announces Intent to Acquire Coriant and Preliminarily Reports Strong
Q2 Performance
Strategic acquisition approximately doubles revenue, significantly expands Infinera’s
customer base and reaffirms vertical integration strategy
Sunnyvale, Calif. – July  23, 2018 , 1:15 p.m. PDT –  Infinera, provider of Intelligent Transport Networks, announced its intent to acquire Coriant, a privately held global supplier of open, hyperscale network solutions. The acquisition significantly scales the company as the next wave of global network spending begins, creating one of the world’s largest optical network equipment providers. The combination positions Infinera to capitalize on the next wave of global network spending as network operators transform their networks to transition from 4G to 5G, from Optical Transport Network (OTN) to packet and from closed to open network architectures. Infinera’s vertically integrated business model provides the unique ability to unleash value for customers and investors as the company’s combined network solutions power the world’s largest network operators. Ovum forecasts optical network spending to reach $17.8 billion in 2022.
“Acquiring Coriant is a fantastic opportunity, strengthening our ability to serve the world’s largest network operators, accelerating our ability to leverage vertical integration and reinforcing our commitment to our long-term business model,” said Tom Fallon, Infinera CEO. “This powerful combination immediately benefits our combined customers by delivering the innovative technology required for the next wave of network spending.”
“Joining forces with Infinera accelerates our vision of transforming next-generation networks with best-in-class innovation,” said Pat DiPietro, CEO and Vice Chairman of Coriant. “The combined company will benefit from Coriant’s significant investments in software automation and open, disaggregated solutions, which have gained significant traction and wide-scale adoption by customers around the world.”
Strategic and Financial Rationale
 
 	•	 	Compelling strategic logic: The scale economics of Infinera’s vertically integrated business model deliver higher performance at lower cost for our customers and higher profit margins for our stockholders. The acquisition approximately doubles Infinera’s revenue and expands the company’s customer base to serve nine of the top 10 global network operators (five new to Infinera) and the top six global internet content providers (three new to Infinera).	
 
 	•	 	Financially attractive:  The acquisition is expected to be substantially accretive in 2019. This accretion will come from $100 million of identified cost savings in both cost of goods sold and operating expenses. Total cost synergies of $250 million are expected through 2021, with the continuation of operating synergies and the introduction of vertical integration into the Coriant product line, resulting in a step-function increase in Coriant’s margins. Infinera will be acquiring a debt-free balance sheet and expects cash flows to pay back transaction consideration within three years.	

 
 	•	 	Innovation to benefit customer networks: Coriant invested nearly $1 billion in research and development over the last five years to significantly advance its portfolio to address the growing demand for software automation and open, disaggregated platforms. Infinera recently upgraded its portfolio based on the innovative Infinite Capacity Engine (ICE4). Combining the strengths of both companies creates a powerful new portfolio to support our customers’ transition from 4G to 5G, from OTN to packet and from closed to open network architectures.	
Transaction Details
Under the terms of the definitive purchase agreement governing the acquisition, subject to customary adjustments, Infinera will pay approximately $150 million in cash at closing, and estimated additional amounts of $25 million in the two quarters post-closing and $55 million over a period of years. Infinera will issue approximately 21 million shares, which when combined with the cash consideration, results in total transaction consideration of approximately $430 million. Confident in the combined company’s opportunities, Coriant’s majority owner, Oaktree Capital Management (“Oaktree”), expressed an interest in being compensated for this transaction largely in stock. Post-transaction, Oaktree will own approximately 12 percent of the combined company on a fully diluted basis. Pursuant to the terms of the definitive purchase agreement, Oaktree has agreed to lock up 50 percent of its shares for six months post-close and the remaining 50 percent of its shares for 12 months post-close.
To fund the cash requirements of this transaction, and to support future working capital requirements, Infinera plans to pursue debt financing. Morgan Stanley Senior Funding, Inc. has committed to provide debt financing for the transaction, subject to customary conditions.
The acquisition is expected to close in the third quarter of 2018, subject to customary closing conditions. The board of directors of Infinera has unanimously approved the transaction.
Morgan Stanley & Co. LLC served as financial advisor and Wilson Sonsini Goodrich & Rosati, P.C. served as legal counsel to Infinera on this transaction. Moelis & Company served as financial advisor and Kirkland & Ellis served as legal counsel to Coriant.
Preliminary Second Quarter 2018 Results
Infinera will provide its second quarter results and commentary on its Q2 earnings call on August 7, 2018. Preliminarily:
 
 	•	 	Revenue is expected to be slightly higher than the midpoint of our previously reported guidance range	
 
 	•	 	GAAP gross margin and non-GAAP gross margin are expected be at the high end of our previously reported guidance ranges	
 
 	•	 	GAAP operating expenses and non-GAAP operating expenses are expected to be in line with the midpoint of our previously reported guidance ranges	
 
 	•	 	GAAP operating margin and non-GAAP operating margin are expected to exceed our previously reported guidance estimates	

 
Additional Stockholder Information
For more information about Infinera’s intent to acquire Coriant, please download the stockholder letter and investor presentation from our investor relations website at investors.infinera.com.
Investor Conference Call
Infinera will also host a conference call to discuss its intent to acquire Coriant today (July 23, 2018) at 5:00 p.m. ET/2:00 p.m. PT. This call will be accessible live and on an archived basis:
Audio Webcast: investors.infinera.com, under “Events”
Live Dial-in: 1-866-373-6878 (toll free); 1-412-317-5101 (international)
Ask to join the Infinera call.
We encourage those who plan to dial into the conference call to use the following link to pre-register: http://dpregister.com/10122744. Callers who pre-register will be given dial-in instructions and receive a unique PIN via email to gain immediate access to the call.
Contacts:

Media:
Anna Vue
Tel. +1 (916) 595-8157
avue@infinera.com	  	Investors:
Jeff Hustis
Tel: + 1 (408) 213-7150
jhustis@infinera.com	
About Infinera
Infinera (NASDAQ: INFN) provides Intelligent Transport Networks, enabling carriers, cloud operators, governments and enterprises to scale network bandwidth, accelerate service innovation and automate optical network operations. Infinera’s end-to-end packet-optical portfolio is designed for long-haul, subsea, data center interconnect and metro applications. To learn more about Infinera visit www.infinera.com , follow us on Twitter @Infinera and read our latest blog posts at blog.infinera.com .
Infinera and the Infinera logo are registered trademarks of Infinera Corporation.
About Coriant
Coriant delivers innovative and dynamic networking solutions for a fast-changing and cloud-centric business world. The Coriant SDN/NFV-enabled portfolio of open, and hyperscale solutions helps network operators cost-efficiently scale network capacity, reduce operational complexity, and create the resilient foundation for a new generation of mobile, video, and cloud services. Coriant serves leading network operators around the world, including mobile and fixed line service providers, cloud and data center operators, Web 2.0 content providers, cable MSOs, government agencies, and large enterprises.
Forward Looking Statements
This press release contains forward-looking statements related to the Infinera, Coriant and the acquisition of Coriant by the Infinera that involves substantial risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed or implied by such statements. All statements other than statements of historical fact could be deemed forward-looking, including, but not limited to, any statements about future market and financial

 
performance and similar statements; anticipated cost savings from the combined company; statements regarding future products or technology as well as the timing to market of any such products or technology; any projections of financial information or anticipated benefits from cost synergies; any statements about historical results that may suggest trends for our business; expectations regarding anticipated closing of the acquisition and timing of the debt financing; and expectations regarding second quarter financial results.
These statements are subject to numerous risks and uncertainties. These risks and uncertainties include, but are not limited to, the following: the timing to consummate the proposed acquisition; the risk that a condition to closing of the proposed acquisition may not be satisfied; the risk that a regulatory approval that may be required for the proposed acquisition is not obtained or is obtained subject to conditions that are not anticipated; the parties’ ability to achieve the synergies and value creation contemplated by the proposed acquisition; the parties’ ability to promptly and effectively integrate the businesses of Infinera and Coriant, including unexpected transaction costs, and the costs of integrating operations, severance, professional fees and other expenses; the diversion of management time on issues related to the acquisition; the failure to consummate or any delay in consummating the acquisition for other reasons; changes in laws or regulations; the risks of customer and employee loss and business disruption, including, without limitation, as the result of difficulties in maintaining relationships with employees; increased competitive pressures and solicitations of customers and employees by competitors; the difficulties and risks inherent with entering new markets; and changes in general economic conditions. For additional information concerning factors that could cause actual conditions, events or results to materially differ from those described in the forward-looking statements, please refer to the factors set forth under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Infinera’s most recent Annual Report on Form 10-K, filed with the SEC on February 28, 2018 and its Quarterly Report on Form 10-Q filed with the SEC on May 10, 2018. Additional information will also be set forth in Infinera’s future Quarterly Reports on Form 10-Q, Annual Reports on Form 10-K and other filings that Infinera makes with the SEC. Infinera disclaims any obligation to update information contained in these forward-looking statements whether as a result of new information, future events, or otherwise.