Ciena to pay $400 million for Petaluma’s Cyan

Petaluma networking equipment developer Cyan Inc. announced an agreement Monday to be acquired by Ciena for about $400 million, becoming the latest company to make the journey from Telecom Valley startup to a lucrative acquisition target.

Mark Floyd, chairman and chief executive officer of Cyan, said the sale made sense as his company develops and sells software and equipment that help telephone companies, data centers and private network operators reduce the cost of moving data quickly across their networks, while Ciena is a top provider of fiber-optic networking equipment.

“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,” Floyd said in a statement.

Under terms of the deal, shareholders will receive cash and stock valued at 0.224 shares of Ciena common stock for every Cyan share, 89 percent of which will be delivered in Ciena shares and 11 percent in cash.

The deal values Cyan’s stock at $4.75 per share, which is a 30 percent increase over its closing price on Friday of $3.65. Ciena shares closed at $21.62 Monday.

“Ciena and Cyan share the common belief that disruptive innovations and a customer-first approach are key ingredients to enable network transformation,” Cyan president and co-founder Mike Hatfield said in a statement. “We are confident that our combined efforts will accelerate this transformation adding significant value for our customers.”

Founded in 2006, the Petaluma company has 260 employees and 180 customers worldwide including telecommunications service providers, enterprises and governments.

Revenues grew rapidly since the company’s inception, rising from $40.4 million in 2011 to a record $116.6 million in 2013, but fell last year to $100.5 million after a reduction in spending by its largest customer, Windstream.

Hatfield, who co-founded the company, helped build some of the most valuable and durable tech startups in an area of Sonoma County that came to be known as Telecom Valley during the 1990s.

An early team member at Advanced Fibre Communications, Hatfield left the Petaluma company after its IPO and helped to launch Cerent. The 2-year-old Petaluma startup was acquired in 1999 by Cisco for $7.3 billion - the biggest buyout in Sonoma County history - in a deal that made half of its 400 employees millionaires, at least on paper before tech stocks crashed the following year. Two months after the Cerent sale, he helped start Calix, which went public in 2010 with an $82 million IPO.

Hatfield stepped down as CEO in 2012, when Floyd was brought in to lead the company

Cyan on Monday also reported first-quarter results with its revenue increasing to $36 million, up 89 percent from $19 million in the first quarter of 2014.

Monday’s sale is the second blockbuster deal for a Sonoma County company in five weeks. Last month, a subsidiary of fertilizer giant Scotts Miracle-Gro announced a deal to acquire General Hydroponics, a homegrown Sonoma County company that has become a major international supplier of liquid nutrients used to grow food, flowers and indoor marijuana. The deal was valued at about $130 million, according to Columbus Business First, an Ohio business newspaper.