Nokia to acquire Infinera (INFN) for $6.65/share or an enterprise value of $2.3 bln; deal financed from Nokia's cash on hand (3.73 +0.06)
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Nokia (NOK) and Infinera (INFN) announce a definitive agreement under which Nokia will acquire Infinera in a transaction valuing the company at $6.65 per share or an enterprise value of US $2.3 billion to increase scale in Optical Networks and accelerate product roadmap.
- The transaction represents a premium of 28% to Infinera's share price at the close of 26 June 2024 and a 37% premium to the trailing 180-day volume weighted average price (VWAP).
- At least 70% of the consideration will be paid in cash and Infinera's shareholders can elect to receive up to 30% of the aggregate consideration in the form of Nokia ADSs.
- Nokia's Board of Directors has committed to increase and accelerate Nokia's share buyback program to offset the dilution from the deal. This will be in addition to Nokia's on-going EUR 600 million buyback program.
- The transaction aligns strongly with Nokia's strategy, as it is expected to strengthen the company's technology leadership in optical and increase exposure to webscale customers, the fastest growing segment of the market. Nokia believes the transaction has compelling financial and strategic merit. The combination with Infinera is projected to accelerate Nokia's journey to a double-digit operating margin in its Optical Networks business.
- Nokia targets to achieve EUR 200 million of net comparable operating profit synergies by 2027. Nokia targets mid-single digit organic growth for the overall Network Infrastructure business and to improve its operating margin to mid-to-high teens level.
- The transaction is expected to be accretive to Nokia's comparable EPS in the first year post close and to deliver over 10% comparable EPS accretion by 2027, with a return on invested capital (RoIC) comfortably above Nokia's weighted average cost of capital (WACC).
- At or around the time of closing of the transaction Nokia will repurchase Infinera's outstanding convertible notes for an estimated total value of approximately US $760 million including estimated change of control costs which is already considered in the previously mentioned US $2.3 billion enterprise value.
- The acquisition has been unanimously approved by the board of directors of both Nokia and Infinera. It is targeted to close during the first half of 2025, subject to approval by Infinera's shareholders, regulatory approvals including antitrust, CFIUS and other foreign direct investment approvals and other customary closing conditions.