Clearfield acquires European fiber-optic cabling specialist Nestor Cables

On May 17, Clearfield (NASDAQ: CLFD), a specialist in fiber management and connectivity platforms for communication service providers, announced it has entered into a definitive agreement to acquire Finnish company Nestor Cables Oy, a developer and manufacturer of fiber-optic cable products.

Nestor offers its customers complete platforms for fiber-optic networks, including fiber to the home (FTTH) and fiber to the premises (FTTP) applications. According to a press release, "The pending acquisition follows a long-standing, synergistic relationship between Clearfield and Nestor, who have worked together for over a decade."

The acquisition is expected to be accretive to Clearfield earnings. Nestor was founded in 2007 in Oulu, Finland, by cable technology professionals in that country. Its product portfolio includes fiber-optic cables, connectivity accessories for fiber-optic networks and instrumentation, and the Nestor Optimus product family for microduct networks.

Nestor has a strong market position in Finland as a supplier of optical fiber cabling. The company also exports many of its products to the European continent, accounting for approximately 30% of its annual revenues. Clearfield notes that Nestor operates two production facilities and has customers in more than 50 countries.

Strategic rationale

Since 2012, Nestor has supplied fiber-optic cables for Clearfield’s FieldShield product line. The strategic acquisition will enable Clearfield to vertically integrate the supply of its fiber-optic cables to meet future customer demand, the company said.

Further, Clearfield anticipates leveraging the deep technical expertise of the Nestor team, who have decades of optical experience, to extend the available supply of FieldShield fiber into the North American market.

Subsequnt to the acquisition, Clearfield expects to open optical fiber production in its Mexico facility and begin production of optical cable in North America in the early months of 2023.

Concurrently, Nestor will continue to service all of its existing customers throughout Finland and other European countries, as Clearfield brings its fiber management solutions to Nestor’s customers and prospects in the European market. In 2021, Nestor generated EUR €31.7 million in revenue under Finnish Accounting Standards.

The value of the transaction including fees is approximately US $23 million. Clearfield expects to fund the acquisition through its credit facility.

“The acquisition of Nestor is a significant milestone for Clearfield,” commented Clearfield's president and CEO Cheri Beranek. “Nestor has been a wonderful company to work with over the last 10 years, and we are thrilled to be adding them to our team. Nestor’s focus on providing its customers with reliable and flexible deliveries, quick reaction times, and operational efficiency is entirely aligned with Clearfield’s company culture. Moreover, Nestor employees have deep expertise in fiber optical development and manufacturing, with many employees who gained their skills with the production of optical cable by Nokia years ago. We are excited for the potential opportunities afforded by this acquisition, namely the ability to leverage their fiber optic cable expertise in our own manufacturing facility in Mexico and, in the longer term, evaluate the opportunity to enter the European market with our fiber management solutions.”

The transaction is expected to close in a few months and is subject to customary Finnish regulatory approvals. Upon close of the transaction, Nestor will be operated as a subsidiary of Clearfield.

Jarmo Rajala, president and CEO of Nestor, concluded: “Clearfield has been a fantastic partner to Nestor Cables for many years. As a true leader in the growing Community Broadband space, we are delighted to join Clearfield at this pivotal moment for the fiber broadband industry. We look forward to supporting the expansion of FieldShield fiber availability in North America as the demand for fiber continues to grow exponentially.”