Analyst: Infinera Corp. Seeks Wider Market With Transmode AB Buy

Infinera Corp.'s

$350 million plan to acquire Swedish optical network equipment maker Transmode AB

is aimed at expanding its market into metro areas, an analyst said Thursday. J.P. Morgan's Rod Hall expects a merger would boost Infinera's 2016 earnings per share by between 1.5 percent and 3 percent, while having little impact on the current year. Sunnyvale, California-based Infinera changed hands recently at $19.61, off 2.27 percent. The company traded briefly near a 52-week high of $20.59 following news of the deal Thursday. Infinera hopes to boost its sales in the market for optical networks in densely populated urban areas, which cover distances of up to several hundred yards, Hall said. Infinera had been set to launch a product for the high end of that market later this year, but the addition of Transmode's products may offer significantly wider potential, according to Hall, who reiterated an Overweight rating on Infinera. The deal, expected to close in the third fiscal quarter of 2015, includes $96 million in cash for Transmode, plus 13 million Infinera shares. Following the merger, Transmode's shareholders will own 8.7 percent of the combined company.