Nokia has taken a significant step towards expanding its telecommunications hardware services by acquiring network provider and advanced semiconductor supplier Infinera for $2.3 billion. The purchase price is set at $6.65 per share, with 70% of the payment in cash and 30% in stock. Following the announcement, Nokia’s shares rose by 4%.
With this strategic move, Nokia aims to strengthen its presence in the North American market by integrating Infinera into its operations. The merger is expected to enable Nokia to achieve a comparable operating profit of 200 million euros by 2027. This acquisition will position Nokia as the second-largest supplier in the optical network market with a 20% market share, surpassing its competitor Ciena, while Huawei remains the market leader.
Strategic Insights from Nokia’s Leadership
Nokia’s President and CEO Pekka Lundmark commented on the acquisition:
“In 2021, we increased our competitiveness with organic investments in optical networks. These investments resulted in improved customer recognition, strong sales growth, and increased profitability. We believe now is the right time to expand Nokia’s scale in optical networks and take a strategic step forward. The strong alignment of the combined companies’ customer, geographic, and technology profiles will create significant value for shareholders.”
Enhanced Network Infrastructure Capabilities
Federico Guillén, President of Nokia Network Infrastructure, added:
“Nokia offers a unique portfolio in fixed access, optical, and IP networks, supported by leading technology innovation and a customer-centric approach. This acquisition will further strengthen our optical business, increase our growth opportunities, and improve our operating margins. We are thrilled to bring these two talented teams together and find the rationale for this merger compelling.”
Infinera’s Perspective on the Acquisition
David Heard, CEO of Infinera, expressed his thoughts:
“We are excited about the value this merger will bring to our global customers. Together with Nokia, we will set the pace for innovation in telecommunications networks, within data center applications, and between data centers. This combination will allow us to leverage our optical semiconductor technologies further and offer the advantages of a global leader to our stakeholders.”
