Latest Articles

HomeLatestInfinera Shares Soar on Nokia Acquisition News; Stifel Downgrades to Hold
Advertisements

Infinera Shares Soar on Nokia Acquisition News; Stifel Downgrades to Hold

In a significant move aimed at bolstering its optical-networks business, Nokia (NOK) has announced its acquisition of Infinera (NASDAQ: INFN) in a $2.3 billion deal. This strategic acquisition propelled INFN shares nearly 19% higher in premarket trading on Friday.

Advertisements

Nokia, renowned for its 5G cellular antennas and telecom infrastructure, anticipates that integrating with Infinera will accelerate its path to achieving double-digit operating margins within the optical networks sector. The transaction follows Nokia’s recent divestment of its submarine networks, reshaping its focus to concentrate on fixed networks, internet-protocol networks, and optical networks.

Advertisements

Under the terms of the deal, valued at $6.65 per share, Nokia will pay a 28% premium over Infinera’s closing stock price on Wednesday. Approximately 70% of the consideration will be in cash, with Infinera shareholders given the option to receive up to 30% in Nokia’s American depositary shares. The acquisition also includes repurchasing Infinera’s $760 million in convertible notes.

Advertisements

Nokia anticipates the acquisition to enhance its comparable earnings per share (EPS) starting in the first year post-closing, projecting over 10% EPS accretion by 2027.

Analysts at Stifel, while acknowledging the strategic benefits for Nokia, downgraded Infinera shares to Hold and adjusted the price target to $6.65. They cited ongoing challenges in the telecom sector as contributing to a potentially difficult operating environment in the medium term, despite Infinera’s efforts in executing its new product strategy.

According to Stifel analysts, “In addition to adding scale to Nokia’s core optical systems business, INFN adds coherent digital signal processing (DSP) expertise, strong photonic integrated circuit (PIC) technologies, a portfolio and roadmap of coherent pluggable products and US-based manufacturing, testing and packaging.”

The acquisition is expected to close subject to regulatory approvals and customary closing conditions.

Related topics:

Advertisements
Advertisements