Nokia has announced the acquisition of Infinera, a Californian manufacturer of optical network solutions and semiconductors, for approximately 2.3 billion US dollars. The deal is aimed at expanding Nokia’s optical network business and accelerating product development.
Nokia plans to achieve synergy benefits of 200 million euros in comparable operating profit by 2027 through the acquisition. The company aims to improve its operating profit and earnings per share within the first year of the deal and achieve more than a ten percent increase in comparable earnings per share by 2027.
The transaction will involve at least 70 percent of the purchase price being paid in cash and a maximum of 30 percent in shares. Infinera shareholders have the option to receive either cash, Nokia shares, or a combination of both. Nokia will finance the deal using its cash resources and plans to increase its share buyback program to offset the dilutive effect of the acquisition.
Nokia views the acquisition as having strong strategic and financial rationale and expects it to accelerate the achievement of a double-digit operating profit percentage in the Optical Networks business. The company intends to create a renewed Network Infrastructure business group that includes Fixed Networks, IP Networks, and Optical Networks.
Nokia’s CEO, Pekka Lundmark, expressed optimism about the deal, stating that it presents an opportunity to achieve significant value for shareholders through improved earnings per share. The company aims for an annual organic growth rate of 4–6 percent and an operating profit margin of 14–18 percent for the entity created as a result of the acquisition.
