Nokia has announced the acquisition of US semiconductor company Infinera for 2.3 billion dollars, with the aim of improving its profitability and market position in optical networks. This move is expected to enhance Nokia’s competitiveness in North America, where 60 percent of Infinera’s sales come from. CEO Pekka Lundmark believes that the acquisition will lead to a 10 percent improvement in earnings per share, benefiting shareholders significantly.
The transaction will see Nokia offering Infinera shareholders $6.65 per share, which is 37 percent higher than the six-month average share price. The purchase will be financed with a combination of cash and Nokia shares, with the company increasing its share buyback program to offset any dilution. Nokia’s net cash of 5.1 billion euros as of March will fund the deal.
Nokia and Infinera view this acquisition as an opportunity to accelerate innovation in optical networks, respond to evolving customer needs, and tap into new business opportunities. The merger will combine the companies’ strengths in terms of customers, markets, and technologies, positioning them for rapid growth in the telecommunications sector.
The goal is for Infinera to be integrated into Nokia’s network infrastructure business group, with a focus on achieving annual growth of 4–6 percent in turnover and 14–18 percent in operating profit. Nokia anticipates 200 million euros in synergy benefits by 2027 through cost savings and operational efficiencies.
This acquisition is expected to enhance Nokia’s market leadership, expand its product offerings, and drive growth in the optical networks segment. Both companies are optimistic about the potential for innovation and meeting the increasing demand for optical solutions in the telecommunications industry. Additionally, this deal emphasizes the importance of optical networks in enhancing connectivity between data centers and meeting evolving needs of internet companies.
As Nokia and Infinera combine their resources and expertise, they aim to deliver cutting-edge solutions that remain at the forefront of technological advancements in the telecommunications sector.
In conclusion, this acquisition is a significant step towards improving profitability and market position for Nokia while also driving growth
