Ciena closes Cyan acquisition, begins integration

Ciena Corp. (NYSE: CIEN) says it has completed its acquisition of fellow packet-optical transport system and software-defined networking (SDN) platform supplier Cyan, Inc. (see "Ciena to buy Cyan, expand SDN play"). It also has revealed its integration strategy for the new assets.

Ciena had initially stated it expected to spend around $400 million to acquire Cyan, but the final price tag ended up at $488 million (or $415 million, net of estimated cash acquired) in the form of approximately $33.6 million in cash and 10.6 million shares of Ciena common stock. Ciena also assumed Cyan's $50.0 million in outstanding principal amount of 8.0% Convertible Senior Notes due in 2019.

The traction Cyan had achieved with its Blue Planet SDN portfolio was the main catalyst for the deal. Ciena has recognized that traction with the creation of the Blue Planet division, under the leadership of former Cyan president, Mark Hatfield, who will now carry a Ciena vice president title. The division will be responsible for the company's SDN software operations, including the recently announce Agility activities (see "Ciena Agility Matrix offers online shopping for VNFs").

The division's portfolio will include the Blue Planet offerings, including Planet Orchestrate and Planet Operate, and Ciena's SDN Multilayer WAN Controller and its applications, which include V-WAN, Agility Matrix, and network management tools. The division will include teams responsible for software development, product line management, product marketing, service and support, sales, and business development.

On the hardware end, Ciena promises continued innovation in packet-optical transport systems. The company says it will continue to support Cyan's Z-Series packet-optical transport platforms, which a Ciena press release described as serving "a complementary base of key customers." However, the release made no mention of the N-Series data center interconnect platforms, which compete directly with Ciena's new Waveserver system. In response to a query on the fate of the N-Series, a company source supplied the following: "We are committed to meeting the needs of existing customer bases and providing them with an outstanding customer experience, just as we successfully did with the Nortel MEN transaction. The combined capabilities of Ciena and Cyan create even stronger support and greater forward innovation for customers. That said, we will look to leverage complementary capabilities and eliminate overlapping investments. We will provide more specific detail on the combined portfolio in the coming months."

The release also included endorsements of the new combination from Aamir Hussain, executive vice president and chief technology officer at CenturyLink and Randy Nicklas, executive vice president of engineering and chief technology officer at Windstream. Windstream was Cyan's largest packet-optical transport customer (see, for example, "Windstream adds 100G to regional metro networks with Cyan"), while CenturyLink is a Blue Planet customer (see "CenturyLink tabs Cyan's Blue Planet to orchestrate NFV-enabled business services").

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