Nokia is buying Infinera, a optical network equipment company, in a deal worth $2.3 billion.

In a strategic move aimed at enhancing its optical business, Nokia has announced plans to acquire Infinera, a company specializing in open optical networking solutions and optical semiconductors. This acquisition positions Nokia to expand its footprint, particularly in the North American market.

The deal has been set at $6.65 per share, resulting in an overall enterprise value of approximately $2.3 billion for Infinera. This valuation marks a 28% increase over Infinera’s share price as of June 26, 2024, and a 37% rise compared to the average price over the last 180 days, as highlighted by Nokia in an official announcement.

Nokia has committed to paying at least 70% of the purchase price in cash while offering Infinera shareholders the option to receive up to 30% in Nokia’s American Depositary Shares.

Nokia views the acquisition as a financially beneficial and strategically advantageous move, expected to drive the company towards achieving a double-digit operating margin in its Optical Networks division. Aiming for net comparable operating profit synergies of 200 million euros by 2027, Nokia anticipates this deal will significantly accelerate its growth trajectory.

Having received approval from the boards of both firms, the transaction is slated for completion in the first half of 2025, pending the necessary regulatory and shareholder consent.

Additionally, Nokia has disclosed its agreement to sell Alcatel Submarine Networks (ASN) to the French government for 350 million euros ($374 million), a transaction anticipated to conclude by late 2024 or early 2025. This sale, however, is not expected to influence Nokia’s financial projections.

Through these manoeuvres, Nokia anticipates achieving a mid-single-digit organic growth rate within its overall Network Infrastructure business. It aims to elevate its operating margin to a mid-to-high teens level.

Pekka Lundmark, Nokia’s President and CEO, emphasized the merging entities’ strategic alignment and complementary nature, projecting over 10% comparable EPS growth and significant shareholder value from the deal. Federico Guillén, President of Network Infrastructure at Nokia, echoed these sentiments, foreseeing enhanced growth opportunities and improved operating margins due to the acquisition.

David Heard, Infinera’s CEO, highlighted the merger’s potential to capitalize on vertically integrated optical semiconductor technologies, offering stakeholders a stake in a leading optical networking solutions provider.