Nokia Acquires Infinera for $2.3 Billion to Expand Data Center Presence

Nokia has announced its plans to acquire US-based optical networking specialist Infinera in a significant deal valued at $2.3 billion. The primary objective behind this acquisition is to bolster Nokia's presence in the data center technology sector.

This move comes on the heels of Nokia's recent restructuring of its optical networks division, which involved the sale of 80% of Alcatel Submarine Networks to the French government for €350 million. By integrating Infinera into its operations, Nokia aims to create a more robust Network Infrastructure that encompasses Fixed Networks, IP Networks, and Optical Networks.

"Together, we will have greater scale and deeper resources to drive innovation and cater to the evolving needs of customers in a time where optical technologies play a crucial role across various sectors, including telecom networks, inter-data center applications, and now within the data center itself," stated David Heard, the CEO of Infinera.

The acquisition is expected to significantly enhance Nokia's Optical Networks business, boosting its scale by 75% and enabling the acceleration of product development and roadmap expansion. This strategic move will also bring about an increase in expertise in key areas such as digital signal processing, silicon photonics, semiconductor material sciences, and photonic integrated circuit technology.

According to the terms of the deal, at least 70% of the consideration for acquiring Infinera will be in cash, while Infinera's shareholders will have the option to receive up to 30% of the total consideration in the form of Nokia US shares. Pekka Lundmark, the President and CEO of Nokia, expressed confidence in the decision to pursue this acquisition, citing the positive outcomes of the company's increased investment in Optical Networks in 2021.

Federico Guillén, President of Network Infrastructure at Nokia, highlighted the strategic alignment between the two companies and the synergies that the acquisition will bring. He emphasized the complementary nature of their customer base, geographic reach, and technological capabilities, underscoring the potential for growth and improved operational performance.

With limited customer overlap, the combined entity is poised to strengthen its position in global markets, with the exception of China. Infinera's strong presence in the North American optical market, which accounts for approximately 60% of its sales, will complement Nokia's existing strengths in APAC, EMEA, and Latin America, further solidifying its optical networking footprint.

By joining forces, Nokia and Infinera aim to create a powerhouse in the optical networking space, leveraging their respective strengths to drive innovation, expand market reach, and deliver enhanced value to customers worldwide.