Nokia decided to focus on its core IP/optical business and transition its niche Video Product Business to a specialist owner in the communications & media space.
- Nokia’s Video customers were very important to them. Lumine was able to jointly own the Video Product Business with Nokia during a smooth transition period to ensure strong ongoing customer service without interruption.
- Lumine was able to structure and close this transaction very rapidly with a certainty of close including transferring a Video Product workforce in 14 countries.
- Lumine could guarantee the continuity of the business in perpetuity and allow the business to remain autonomous to allow for sustained innovation.
Velocix is a leading provider of Content Delivery Network (CDN) solutions for communication service providers. The company’s customers include several of the world’s largest Tier 1 service providers, including Liberty Global, Vodafone, Telefonica, Telus, T-Mobile, and more. Customers around the globe rely on Velocix to deliver millions of personalized content streams every day. Velocix was first acquired by Alcatel-Lucent in 2009. The acquisition brought CDN infrastructure solutions that complemented Alcatel-Lucent’s existing technology and business initiatives. In 2016, Alcatel-Lucent was acquired by Nokia and the IP video business unit (Velocix) was transferred to Nokia as part of the acquisition.
The Decision to Divest
Nokia recognized that market drivers such as 5G, higher definition video, multiscreen, and time shift end-user viewing preferences require innovation in CDN technology over the long-term. This requires investment, focus, and sustained commitment to the Video space. Nokia evaluated several options and decided that a perpetual specialized owner such as Lumine, with strong financial stability and investment potential, was the best owner and long-term custodian of this technology, whilst enabling Nokia to stay involved as a joint owner and sale channel.
The new partnership with Lumine enables Velocix to invest for growth through innovation and market coverage. Velocix will learn Lumine best practices, which will enable us to scale profitably, while remaining independent. This will allow Velocix to make the best decisions for our customers and markets.
– Paul Larbey, Director, Velocix
3 Reasons Velocix Networks Chose Lumine
Buy and Hold Forever = Long Term Decision Making
As a "buy and hold forever" acquirer, Lumines would never resell the business to a competitor. Nokia believed this notion would resonate with its customers as it would offer stability and allay concerns of the company "disappearing."
The Velocix customers are still customers of the larger Nokia business. Therefore, Nokia needed to feel confident that these customer relationships would continue to be protected following the acquisition. To ensure no disruption to customers, Lumine committed to ensuring service level agreements would be met.
An Efficient & Flexible Process
As seasoned acquirers of software businesses, Lumine's M&A knowledge has been sharpened through numerous transactions with corporate entities. With experience, comes efficiency, speed, and certainty to close. This capability was crucial for Nokia to create the most flexible deal structure.
Growth for the Future
As part of the acquisition, Velocix has become a standalone business within Lumine Group. Over the next year, Velocix aims to develop processes that will allow them to run the business more autonomously. Plans are also underway to expand their business by tapping into the ecosystem of customers within the Lumine portfolio. Velocix was excited to learn of previous carve-outs Lumine had executed and heard their inorganic success stories. The opportunity to expand the Velocix portfolio via acquisition resonated with the Velocix management team.
Velocix will also leverage the expertise of the Lumine and its existing customer base of hundreds of service provider customers. At Lumine, Velocix will stay true to its original goals as a company: to enable big changes in the video market, to personalize media delivery, and enable a compelling entertainment experience for consumers on every screen.