Nokia, a leading network equipment manufacturer, has announced the acquisition of Infinera, a California-based company that specializes in optical network solutions and semiconductors, for approximately $2.3 billion US dollars. The deal is expected to significantly enhance Nokia’s optical network business and accelerate product development, thereby strengthening its market position in North America.
The acquisition will enable Nokia to achieve synergy benefits of 200 million euros in comparable operating profit by 2027. The purchase will be funded with a combination of cash and Nokia shares, with at least 70 percent of the price being paid in cash. Additionally, Nokia plans to increase its share buyback program to offset the transaction’s dilutive effect.
Nokia CEO Pekka Lundmark expressed his confidence in the deal and emphasized the potential for significant added value for shareholders. This acquisition aligns with Nokia’s goal of achieving an annual organic growth rate of 4–6 percent and an operating profit margin of 14–18 percent for the entity. Moreover, it will enable Nokia to focus on enhancing competitiveness and achieving a ten percent improvement in comparable earnings per share in its Optical Networks business unit.
Recently, Nokia also announced the sale of its submarine network business, resulting in a renewed Network Infrastructure business group consisting of three strong divisions: Fixed Networks, IP Networks, and Optical Networks. With increased investments in the optical networks business, Nokia aims to achieve a double-digit operating profit percentage in this area.
Overall, this acquisition represents a strategic move by Nokia to strengthen its market position and accelerate product development in the Optical Networks business unit while achieving significant financial gains through synergy benefits.
