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Key Takeaways
- Shares of Infinera soared in premarket trading Friday, a day after the optical networking solutions company agreed to be acquired by Nokia for $2.3 billion.
- The deal is set to close in the first half of next year.
- Nokia said it expects savings in the hundreds of millions of euros by 2027 as the companies integrate their tech and services.
Shares of Infinera (INFN) soared in premarket trading Friday, a day after the optical networking solutions company agreed to be acquired by Finnish telecommunications firm Nokia (NOK) for $2.3 billion.
The deal values California-based Infinera at $6.65 per share, and will be paid at least 70% in cash, with shareholders also able to receive up to 30% of the deal’s value in American depositary shares (ADSs) of Nokia, the companies said Thursday. Shareholders will be able to receive either $6.65 in cash, about 1.8 Nokia shares, or a combination of lower amounts of both cash and stock in exchange for each Infinera share they owned previously.
Nokia Can Gain Exposure To AI Market
Infinera manufactures a number of networking-related products like optical semiconductors, meaning the acquisition can give Nokia larger exposure to the artificial intelligence (AI) data center market that has seen increased demand in the last year.
“We believe now is the right time to take a compelling inorganic step to further expand Nokia’s scale in optical networks,” Nokia Chief Executive Officer (CEO) Pekka Lundmark said. “The combined businesses have a strong strategic fit given their highly complementary customer, geographic and technology profiles.”
The companies said by combining, they “will improve Nokia’s optical scale” in North America, where Infinera generates about 60% of its sales, and “complement Nokia’s strong positions in APAC, EMEA and Latin America.”
Deal Expected To Close in First Half of 2025
The deal is set to close in the first half of next year assuming it’s approved by Infinera shareholders and U.S. regulators, and Nokia said it expects to see an estimated 200 million euros ($214 million) in “net comparable operating profit synergies by 2027.”
Lundmark told Reuters Friday that one of the “key attractions” of the deal was how much it would increase Nokia’s exposure to the data center market at a time when AI is driving significantly increased spending on data centers.
Infinera shares soared about 18% to $6.20 about 45 minutes before the opening bell Friday. American depositary receipts (ADRs) of Nokia were little changed.