Nokia (NOK) announced it will buy Infinera (INFN) in a deal that values the global supplier of open optical networking solutions and advanced optical semiconductors at approximately $2.3 billion, or about $6.65 per share.
The purchase price represents a roughly 26.4% premium to Infinera stock’s June 27 close at $5.26, sending its share price up by more than 18% Friday. NOK stock, meanwhile, is higher by about 2%.
Nokia said that the transaction is expected to be accretive to its comparable operating profit and earnings per share (EPS) in the first year post-close and will deliver 10% comparable EPS accretion by 2027. It also expects to achieve 200 million euros of net comparable operating profit synergies by 2027.
"We believe now is the right time to take a compelling inorganic step to further expand Nokia's scale in optical networks," Nokia CEO Pekka Lundmark said in a statement. "The combined businesses have a strong strategic fit given their highly complementary customer, geographic and technology profiles. With the opportunity to deliver over 10% comparable EPS accretion, we believe this will create significant value for shareholders."
Under the agreement, Infinera shareholders have three options – for each Infinera share they own, they can receive:
- $6.65 in cash
- 1.7896 shares of Nokia
- A combination of $4.66 in cash and 0.5355 share of Nokia
"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-data center applications, and now inside the data center," Infinera CEO David Heard said in a statement. "This combination will further leverage our vertically integrated optical semiconductor technologies."
The transaction is subject to approval by Infinera shareholders, regulatory clearance and other closing conditions, Nokia said. If all goes as planned, the transaction is expected to close during the first half of calendar year 2025.
Following completion of the transaction, Nokia said it will increase and accelerate its stock buyback program "to mitigate any dilution from the equity component of the acquisition."
Is Nokia stock a buy, sell or hold?
Nokia is up nearly 11% for the year to date and Wall Street remains bullish on the tech stock.
According to S&P Global Market Intelligence, the average analyst target price for NOK stock is $4.78, representing implied upside of more than 25% to current levels. Additionally, the consensus recommendation is Buy. However, analysts may revise their price targets on the stock following the deal announcement.
