06:55 AM EDT, 06/28/2024 (MT Newswires) -- Nokia (NOK) will acquire networking solutions provider Infinera ( INFN ) for $2.3 billion in a cash-and-stock deal as the Finnish telecommunications giant seeks to strengthen its optical networks business.

Under the terms, investors of Infinera ( INFN ) will have the option to receive either $6.65 per share in cash, about 1.79 Nokia American depositary shares, or a combination of $4.66 in cash and roughly 0.54 ADS, for each share they own in the company.

Infinera's ( INFN ) stock jumped 18% in recent premarket activity Friday, while Nokia's New York stock exchange-listed shares were up 1.3%.

The deal, which requires approval from regulators, as well as from Infinera's ( INFN ) shareholders, is expected to complete in the first half of 2025. Oaktree Optical Holdings, which owns an 11% stake in Infinera ( INFN ), has voted in favor of the transaction.

Nokia anticipates the acquisition to boost its optical networks position, especially in North America, and expand webscale, its networking solutions for data centers. The company expects the combination to accelerate its path to double-digit operating margins in its optical networks business. Nokia is also targeting mid-single-digit organic gains for its overall network infrastructure business, as well as expanding its operating margin to a mid-to-high-teens level.

"We believe now is the right time to take a compelling inorganic step to further expand Nokia's scale in optical networks," Nokia's Chief Executive Pekka Lundmark said in the statement. "The combined businesses have a strong strategic fit given their highly complementary customer, geographic and technology profiles."

The transaction is projected to be accretive to Nokia's comparable earnings on a per-share basis in the first year after its completion. The company also expects the deal to generate over 10% EPS accretion and comparable operating profit synergies of 200 million euros ($213.9 million) by 2027.

Nokia's board plans to increase the company's share repurchase program to offset the dilution from the deal. The company will also repurchase Infinera's ( INFN ) convertible notes for about $760 million, including estimated change of control costs already considered in the deal value.

"This combination will further leverage our vertically integrated optical semiconductor technologies," Infinera ( INFN ) CEO David Heard said. "Furthermore, our stakeholders will have the opportunity to participate in the upside of a global leader in optical networking solutions."

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