(Bloomberg) — Nokia Oyj has agreed to buy Infinera Corp. in a $2.3 billion deal that will bulk up its network infrastructure business for broadband and fiber optic networks, a key revenue driver as the Finnish company’s mobile infrastructure operations shrink.
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The takeover, which includes debt, will value the optical telecommunications maker at $6.65 per share, the companies said in a statement late on Thursday. At least 70% of the deal will be paid in cash, with the rest consisting of Nokia’s American depositary shares, according to the statement, which confirmed an earlier report by Bloomberg News.
The deal, Nokia’s biggest since the €10.6 billion ($11.4 billion) takeover of Alcatel-Lucent in 2016, will help build up its broadband network business at a time when the company is struggling to compete for mobile contracts. Network infrastructure made up more than a third of Nokia’s sales last quarter, and is now its largest business after the mobile networks business shrank more quickly.
Infinera’s stock had risen 15% over the past 12 months, giving the company a market value of about $1.2 billion. The shares, which closed Thursday at $5.26 each, jumped as much as 25% after the close of regular trading in the US. Nokia shares rose 4% to €3.64 at 10:24 a.m. in Helsinki.
The company is banking on this business unit to help drive a pickup in the second half of the year as customers increase orders for technology used in cloud infrastructure. Mobile networks, historically the company’s strongest unit, have slipped as service providers cut back on orders.
The business suffered a major blow when Ericsson secured a $14 billion contract with AT&T Inc. in December to build an OpenRAN network, a technology that’s more cloud friendly and opens networks up more than previous, heavily integrated solutions.
What Bloomberg Intelligence Says:
Ciena and Cisco may face stiffer competition in the high-speed data-center interconnect market from a Nokia-Infinera combination. The deal gives Nokia market-leading high-speed optical technologies that position it better with cloud accounts, while alleviating Infinera’s balance-sheet concerns, giving it resources to acquire telecom and cloud customers.
— Woo Jin Ho, BI Senior Industry Analyst for Technology
Nokia also said in a separate statement on Thursday that the French government planned to purchase its Alcatel Submarine Networks unit, which has an enterprise value of €350 million.
PJT Partners served as financial adviser to Nokia, while Infinera was advised by Centerview Partners LLC.
–With assistance from Dinesh Nair and Kati Pohjanpalo.
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