June 28, 2024 –On June 27th, Nokia announced an “insider news” on its official website, revealing its intention to acquire Infinera, a global supplier of optical network solutions and optical semiconductors. This move is expected to significantly enhance Nokia’s capabilities in the optical networking domain.
Headquartered in San Jose, California, Infinera is a vertically integrated manufacturer and a pioneer in designing and fabricating large-scale photonic integrated circuits (PICs). The company primarily focuses on producing optical semiconductors and networking equipment for fixed-line and mobile telecommunication networks.
According to the final agreement reached between the two parties, Nokia will acquire Infinera at an enterprise value of 2.3billion,equivalentto6.65 per share. This transaction represents a 28% premium over Infinera’s closing share price on June 26, 2024, and a 37% premium compared to the volume-weighted average price (VWAP) over the past 180 days.
Nokia intends to pay at least 70% of the transaction amount in cash, while the remainder will consist of Nokia’s American Depositary Shares (ADS). Shareholders of Infinera will have the option to choose cash, Nokia stock, or a combination of both as consideration.
Nokia believes that this transaction holds significant financial and strategic value. The merger with Infinera is expected to accelerate the achievement of double-digit operating profit margins for Nokia’s optical networking business. Furthermore, Nokia anticipates that the acquisition will enhance its comparable operating profit and earnings per share in the first year, leading to a comparable earnings per share growth of over 10% by 2027.
In a separate deal, Nokia has also agreed to sell its submarine networking business, ASN, to the French government for €350 million. However, this transaction is not expected to impact Nokia’s financial prospects.
Overall, the acquisition of Infinera marks a significant step forward for Nokia in strengthening its position in the global optical networking market and expanding its footprint in North America.
