Petaluma telecom developer Cyan in deal for $400 million sale
PETALUMA — In one of the largest potential North Bay deals in some time, Cyan Inc. (NYSE: CYNI), maker of software and systems for fiber-optic telecommunications and data networks, on Monday said it entered a deal to be purchased by Ciena (NYSE: CIEN) for a total of $400 million.
The deal is set to close in Ciena’s fourth quarter, which ends in October, pending regulatory and shareholder approval.
The purchase price is about $335 million net of cash acquired, or about $4.75 per share of Cyan’s common stock. Cyan’s stock price was $3.65 a share at the end of the previous trading session, May 1.
Through this deal, Cyan would get global operational, support and sales scale through Ciena and closer connections with tier 1 telecommunications service providers, while Ciena would get network-management software that isn’t tied to a particular equipment vendor and a optical data-switching hardware with a base of customers, according to a Ciena presentation to investors.
Cyan started nearly a decade ago and went public two years back. The company now has about 260 employees, mostly in Petaluma, and roughly 180 customers worldwide. Revenue for its fiscal year, ending Dec. 31, was $101 million, and first-quarter receipts through March 31, were $36 million, the company also reported Monday.
Upon the closing of the transaction, Cyan shareholders will get the equivalent of 0.224 shares of Ciena common stock (89 percent in Ciena common stock and 11 percent in cash. 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.
“Since launching the first Z-Series packet-optical products in 2009, Cyan has introduced the world’s first integrated packet-optical platform, the world’s first deployment ready multi-vendor SDN controller and NFV orchestrator, and the world’s first disaggregated “bright box” optical system. Innovation is core to our business, and our innovation has always been focused on helping customers transform their networks. Joining forces with Ciena, another clear innovator in the networking space, will accelerate this transformation. Together, we will provide our customers with the technologies they demand for a software-controlled operational model, orchestrating services on top of a scalable network, with the ability to rapidly create revenue streams in the new virtualized, on-demand world. This combination enables greater monetization for network operators through more efficient utilization of network assets and faster time-to-market with differentiated and profitable services,” said Mark Floyd, chairman and chief executive officer, Cyan.
Being part of a “larger, global platform” allowed Cyan to be more effective, Floyd said.
Certain officers and directors and affiliated stockholders, including investment funds affiliated with certain directors, collectively holding over 40 percent of the outstanding shares of Cyan, have signed voting agreements committing to support the merger. Jefferies, LLC, is serving as financial adviser to Cyan. Houlihan Lokey Capital, Inc., also provided financial advice to the Cyan board. Wilson Sonsini Goodrich & Rosati is serving as legal counsel to Cyan.
Cyan’s first-quarter revenue grew 89 percent from $19.0 million a year before.
Cyan’s standard quarterly net loss expanded to $52.9 million, or $1.11 per share, from $17.8 million, or 38 cents per share. That includes a $41.3 million noncash charge for the change in fair value of warrant and derivative liabilities associated with our convertible debt, which was primarily the result of a 60 percent increase in the company’s stock price during the quarter.
Cyan’s proforma quarterly net loss was $6.8 million, or 14 cents per share, down from $15.3 million, or 33 cents ar share, a year before.