Nokia to buy Infinera for $2.3B

Aims to expand optical networking biz, particularly in North America

Nokia is set to buy optical networking biz Infinera in a $2.3 billion transaction, the companies have confirmed.

The Finnish networking giant says it has a definitive agreement to acquire California-based Infinera to increase its scale in optical networking and accelerate its own product roadmap.

The sale is expected to close during the first half of 2025, subject to regulatory approval and getting the nod from Infinera's shareholders. At $2.3 billion, the expenditure is said to represent a premium of 28 percent over Infinera's share price at the point the takeover was announced.

Nokia is already one of the world's largest telecoms infrastructure kit companies, but says it and Infinera both reckon that merging would provide greater economies of scale to boost profits.

The combined business will be able to speed the development of new products and services, Nokia believes, beefing up the company's standing in optical technology and drawing in more webscale customers, which it regards as the fastest growing segment of the market.

Nokia President and CEO Pekka Lundmark said that the company had already increased investment in optical networks, and this move would build on that: "The combined businesses have a strong strategic fit given their highly complementary customer, geographic, and technology profiles."

This refers to the two companies currently having limited customer overlap, with Infinera bringing in about 60 percent of its sales from the North America market while Nokia's optical unit does most of its business in other regions. The merger is expected to boost Nokia's scale in America and bolster its tech in APAC, EMEA, and Latin America.

"We believe Nokia is an excellent partner and together we will have greater scale and deeper resources to set the pace of innovation and address rapidly changing customer needs at a time when optics are more important than ever – across telecom networks, inter-datacenter applications, and now inside the datacenter," said Infinera chief David Heard.

According to Nokia, the merger is expected to deliver €200 million ($214 million) of financial savings by 2027, with about a third of this coming from cutting the cost of sales due to supply chain efficiencies, and the remainder from lowered operating expenses due to portfolio optimization and reduced product engineering costs.

To set against that, Nokia expects to take a one-time integration hit of approximately €200 million ($214 million).

In other mergers involving two large corporations, savings are typically made by eliminating duplicate staffing roles – i.e. laying off workers – but Nokia already announced it was jettisoning 14,000 bodies last year as part of a cost-cutting exercise.

The transaction is expected to be "accretive to Nokia's comparable operating profit and earnings per share (EPS) in year 1 and deliver more than 10 percent comparable EPS accretion in 2027," the company said.

Under the terms of the purchase agreement, Nokia will pay Infinera at least 70 percent in cash, with the remainder comprised of Nokia's American Depositary Shares.

Earlier this week, Nokia revealed it was ditching its undersea internet cable business, selling it to the French government for €350 million ($375 million).

Nokia announced profits of €438 million ($469 million), up 52 percent year on year, on sales of €4.6 billion ($4.9 billion) for calendar Q1 of 2024, while Infinera announced a net loss for Q1 of $61.4 million on revenue of $306.9 million.®

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