Nokia, a network equipment manufacturer, has acquired Infinera, a California-based manufacturer of optical network solutions and semiconductors for around 2.3 billion US dollars. The acquisition aims to expand Nokia’s optical networks business and accelerate product development. With this deal, Nokia will establish a scalable and global optical network business that will enhance its technology portfolio and market position in North America.
Nokia expects to achieve synergy benefits of 200 million euros in comparable operating profit by 2027 as a result of this deal. It is projected to enhance Nokia’s comparable operating profit and earnings per share in the first year and deliver over a ten percent increase in comparable earnings per share by 2027. The purchase price will be paid in a combination of cash and shares, with a minimum of 70 percent in cash. Nokia plans to increase its share buyback program to counteract the dilutive effect of the transaction, which will be financed from Nokia’s cash resources.
The acquisition forms part of Nokia’s strategic growth plan, aiming for a double-digit operating profit percentage in the Optical Networks business. Nokia is committed to achieving an annual organic growth rate of 4-6 percent and an operating profit margin of 14-18 percent for the combined business units. CEO Pekka Lundmark expressed confidence in the acquisition, stating that it would significantly benefit shareholders and reinforce Nokia’s position in the optical networks market.
By combining forces with Infinera and selling its submarine network business, Nokia will establish a strong Network Infrastructure business group encompassing Fixed Networks, IP Networks, and Optical Networks. The goal is to enhance the scale and competitiveness of the optical business through acquisitions, driving value for shareholders and creating long-term growth opportunities.
In summary, Nokia has acquired Infinera for around 2.3 billion US dollars as part of its strategic growth plan aimed at expanding its optical networks business and accelerating product development. The acquisition is expected to create synergy benefits worth 200 million euros by 2027 while enhancing Nokia’s comparable operating profit and earnings per share. By establishing a strong Network Infrastructure business group encompassing Fixed Networks, IP Networks, and Optical Networks through acquisitions
