Nokia’s Billion-Dollar Acquisition in the US

Nokia, a network equipment manufacturer, has acquired Californian manufacturer Infinera, specializing in optical network solutions and semiconductors, for approximately 2.3 billion US dollars. The purchase price of $6.65 per share represents a 28 percent premium over Infinera’s closing price on Wednesday. This acquisition is aimed at expanding Nokia’s optical networks business and accelerating product development.

The deal is expected to strengthen Nokia’s technology portfolio, vertical integration, and market position in optical networks, particularly in North America. Nokia plans to achieve synergy benefits of 200 million euros in comparable operating profit by 2027. The transaction will improve Nokia’s operating profit and earnings per share within the first year, with a projected over ten percent increase in earnings per share by 2027.

To finance the deal, at least 70 percent of the purchase price will be paid in cash, with the remaining 30 percent in shares. Nokia also intends to expand its share buyback program to offset any dilution caused by the acquisition. The company believes the transaction has strong strategic and financial rationale and will help achieve double-digit operating profit in the Optical Networks business.

The newly-merged Network Infrastructure business group will include Fixed Networks, IP Networks, and Optical Networks, following Nokia’s recent sale of its submarine network business. Nokia aims for annual organic growth of 4–6 percent and an operating profit margin of 14–18 percent for this entity. The CEO of Nokia, Pekka Lundmark, emphasizes the importance of this acquisition in enhancing the company’s competitiveness and creating significant value for shareholders.