Nokia to Acquire Infinera to Increase Scale in Optical Networks

Nokia announced it will acquire Infinera, a global supplier of open optical networking solutions and advanced optical semiconductors. The transaction is valuing the company at $6.65 per share or an enterprise value of $ 2.3 billion.

It represents a premium of 28% to Infinera’s share price at the close of 26 June 2024 and a 37% premium to the trailing 180-day volume weighted average price (VWAP). At least 70% of the consideration will be paid in cash and Infinera’s shareholders can elect to receive up to 30% of the aggregate consideration in the form of Nokia ADSs. Nokia’s Board of Directors has committed to increase and accelerate Nokia’s share buyback program to offset the dilution from the deal.

Nokia and Infinera see a significant opportunity in merging to improve scale and profitability, enabling the combined business to accelerate the development of new products and solutions to benefit customers. The combination with Infinera is projected to accelerate Nokia’s journey to a double-digit operating margin in its Optical Networks business. Nokia targets to achieve €200 million of net comparable operating profit synergies by 2027. This transaction along with the recently announced sale of Submarine Networks will create a reshaped Network Infrastructure built on three strong pillars: Fixed Networks, IP Networks, and Optical Networks.

“In 2021 we increased our organic investment in Optical Networks with a view to improving our competitiveness. That decision has paid off and has delivered improved customer recognition, strong sales growth, and increased profitability. We believe now is the right time to take a compelling inorganic step to further expand Nokia’s scale in optical networks. The combined businesses have a strong strategic fit given their highly complementary customer, geographic, and technology profiles. With the opportunity to deliver over 10% comparable EPS accretion, we believe this will create significant value for shareholders,” said Pekka Lundmark, President and CEO of Nokia.