425: Infinera and Nokia Address Stockholder Lawsuits with Supplemental Merger Disclosures

Infinera supplements its proxy statement/prospectus with additional disclosures to address stockholder lawsuits challenging the Nokia merger, while maintaining its belief that the original disclosures were compliant and the lawsuits are without merit.

Summary

• Infinera has supplemented its proxy statement/prospectus related to the proposed merger with Nokia to address allegations raised in stockholder lawsuits and demand letters.
• The lawsuits claim that the initial proxy statement/prospectus was materially incomplete and misleading.
• Infinera denies these allegations but is providing supplemental disclosures to avoid the costs and uncertainties of litigation.
• The supplemental disclosures include additional information regarding the premium offered by Nokia, which is 28% to the closing share price on June 26, 2024, and 37% to the 180-day VWAP.
• The supplemental disclosures also include additional information regarding the financial analysis performed by Centerview, including selected public companies trading analysis, selected transaction analysis, and discounted cash flow analysis.
• The special meeting of Infinera's stockholders to vote on the merger is still scheduled for October 1, 2024.
• Oaktree Optical, which beneficially owned approximately 11 percent of the voting power of the outstanding shares of Infinera Common Stock, has entered into a voting agreement to vote in favor of the merger.

Sentiment

Score: 6

Explanation: The sentiment is neutral to slightly positive. While there are lawsuits, the company is addressing them, and the merger offers a premium to shareholders. The deal is still expected to proceed.

Positives

• Infinera is proactively addressing stockholder concerns by providing supplemental disclosures.
• The merger offers a significant premium to Infinera's shareholders, with a 28% premium to the closing share price on June 26, 2024, and a 37% premium to the 180-day VWAP.
• Oaktree Optical, a major shareholder, has agreed to vote in favor of the merger.

Negatives

• The filing of lawsuits and demand letters suggests shareholder dissatisfaction with the initial disclosures.
• The need for supplemental disclosures indicates potential weaknesses or omissions in the original proxy statement/prospectus.
• The lawsuits could potentially delay or disrupt the merger process, although Infinera believes the allegations are without merit.

Risks

• The merger is subject to stockholder approval and regulatory approvals, which may not be obtained.
• The merger could be terminated if certain events or changes occur.
• The merger could disrupt Infinera's and Nokia's business operations and relationships.
• The merger could lead to litigation and increased costs.
• The stock prices of Infinera and Nokia could fluctuate during the pendency of the merger.
• Management's time and attention could be diverted from ongoing business operations.
• Competitors and other market participants could react negatively to the merger.

Future Outlook

The document includes forward-looking statements regarding the anticipated timing of the closing of the Merger, which are subject to various risks and uncertainties.

Management Comments

• Infinera believes that the disclosures set forth in the preliminary proxy statement and the Proxy Statement/Prospectus comply fully with all applicable law and that the allegations contained in the Merger Actions and Demand Letters are without merit.
• Infinera specifically denies all allegations by the purported stockholders in the Merger Actions and Demand Letters that any additional disclosure was or is required or material.

Industry Context

The document references selected public companies trading analysis and selected transaction analysis, providing context for the valuation of Infinera in relation to its peers and similar transactions in the industry.

Comparison to Industry Standards

• The document references several comparable companies in the systems and subsystems peer groups, including ADTRAN Holdings, Ciena Corporation, Cisco Systems, Nokia Corporation, Telefonaktiebolaget Lm Ericsson, Coherent Corp., Lumentum Holdings, and Marvell Technology.
• The document also references several comparable transactions, including Juniper Networks acquisition by Hewlett Packard Enterprise, ADVA Optical Networking SE acquisition by ADTRAN Holdings, and Finisar Corporation acquisition by II-VI Incorporated.
• The EV/Adjusted EBITDA multiples and Price/Adjusted EPS multiples for these companies and transactions are used to derive a range of implied values for Infinera.

Legal Proceedings

• Three complaints, referred to as the Merger Actions, have been filed against Infinera and its Board of Directors.
• The complaints allege that the Proxy Statement/Prospectus is materially incomplete and misleading.
• The Merger Actions seek, among other relief, corrective disclosures, an injunction of the Merger, rescission or rescissory damages, damages and attorneys fees.

Related Party Transactions

• Oaktree Optical, an affiliate of Infinera director Ms. Rice, entered into a Voting Agreement to vote its shares in favor of the merger.

Stakeholder Impact

• Shareholders are impacted by the potential merger and the premium offered.
• Employees may be affected by potential changes in the combined company.
• Customers and suppliers could be impacted by the integration of Infinera and Nokia.

Next Steps

• Infinera stockholders will vote on the merger at a special meeting on October 1, 2024.
• The parties will seek to obtain required regulatory approvals to consummate the merger.

Key Dates