Correction: Inside Information: Nokia to acquire Infinera to
increase scale in Optical Networks and accelerate product roadmap
Nokia CorporationInside Information 28 June 2024 at 22:00
EEST
Correction: Inside Information: Nokia to acquire
Infinera to increase scale in Optical Networks and accelerate
product roadmap
Nokia Corporation corrects its stock exchange release published
on 27 June 2024, which concerned the acquisition of Infinera. The
original stock exchange release lacked a description of Infinera’s
historical financial performance and financial position. The
corrected stock exchange release, which adds a description of
Infinera’s historical financial performance and financial position
in the ‘About Infinera’ section, is included below in its
entirety.
****
Inside Information: Nokia to acquire Infinera to
increase scale in Optical Networks and accelerate product
roadmap
- Creates a highly scaled and truly global optical business with
increased in-house technology capabilities and vertical
integration.
- Strengthens Nokia’s optical position, specifically in North
America.
- Accelerates Nokia’s customer diversification strategy,
expanding webscale presence.
- Targeted net comparable operating profit synergies of EUR 200
million by 2027*.
- Expected to be accretive to Nokia’s comparable operating profit
and EPS in year 1 and to deliver over 10% comparable EPS accretion
in 2027*.
- Offer split at least 70% cash and up to 30% stock; Infinera
shareholders can elect cash, Nokia stock or a combination.
- Nokia to increase share buyback to offset dilution; deal
financed from Nokia’s cash on hand.
Espoo, Finland and San Jose, California, USA – Nokia (NYSE: NOK)
and Infinera (NASDAQ: INFN), a global supplier of innovative open
optical networking solutions and advanced optical semiconductors,
today announced 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. 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.
Nokia and Infinera see a significant opportunity in merging to
improve scale and profitability, enabling the combined business to
accelerate the development of new products and solutions to benefit
customers. 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*. This
transaction along with the recently announced sale of Submarine
Networks will create a reshaped Network Infrastructure built on
three strong pillars of Fixed Networks, IP Networks and Optical
Networks. 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).
Pekka
Lundmark, President and CEO of Nokia,
said: “In 2021 we increased our organic
investment in Optical Networks with a view to improving our
competitiveness. That decision has paid off and has delivered
improved customer recognition, strong sales growth and increased
profitability. We believe now is the right time to take a
compelling inorganic step to further expand Nokia’s scale in
optical networks. The combined businesses have a strong strategic
fit given their highly complementary customer, geographic and
technology profiles. With the opportunity to deliver over 10%
comparable EPS accretion, we believe this will create significant
value for shareholders.”
Federico Guillén, President of Network Infrastructure at
Nokia, said: “Today, Network
Infrastructure offers a unique portfolio across the fixed access,
optical and IP networks domains built on leading technology
innovation and a strong customer focus. This acquisition will
further strengthen the optical pillar of our business, expand our
growth opportunities across all our target customer segments and
improve our operating margin. I am extremely pleased that we are
bringing together these two talented and dedicated teams.
Separately, we have long respected each other as competitors.
Together, we find the logic of combination irresistible.”
David Heard, CEO of Infinera, said: “We
are really excited about the value this combination will bring to
our global customers. We believe Nokia is an excellent partner and
together we will have greater scale and deeper resources to set the
pace of innovation and address rapidly changing customer needs at a
time when optics are more important than ever – across telecom
networks, inter-data center applications, and now inside the data
center. This combination will further leverage our vertically
integrated optical semiconductor technologies. Furthermore, our
stakeholders will have the opportunity to participate in the upside
of a global leader in optical networking solutions.”
Compelling strategic benefits for Nokia, Infinera and
customers
- Improving global scale and product roadmap:
The combination will increase the scale of Nokia’s Optical Networks
business by 75%, enabling it to accelerate its product roadmap
timeline and breadth; providing better products for customers and
creating a business that can sustainably challenge the
competition.
- The combined business will have significant in-house
capabilities, including an expanded digital signal
processor (DSP) development team, expertise across silicon
photonics and indium phosphide-based semiconductor material
sciences, and deeper competency in photonic integrated circuit
(PIC) technology. The result will be a strong innovative player
with a deep and diverse pool of optical networking talent and
expertise.
- Gaining scale in North America optical market:
The two companies have limited customer overlap, putting the
combined business in a strong position in all regions (excluding
China). Infinera has built a solid presence in the North America
optical market, representing ~60% of its sales, which will improve
Nokia’s optical scale in the region and complement Nokia’s strong
positions in APAC, EMEA and Latin America.
- Building on Nokia’s commitment to investment in
US-based manufacturing and advanced testing and packaging
capabilities.
- Accelerating Nokia’s expansion into enterprise and
particularly webscale: The combination of these two
businesses is also expected to accelerate Nokia’s strategic goal of
diversifying its customer base and growing in enterprise. Internet
content providers (ICP or webscale as Nokia typically calls this
segment) make up over 30% of Infinera’s sales. With recent wins in
line systems and pluggables, Infinera is well established in this
fast-growing market. Infinera has also recently been developing
high-speed and low-power optical components for use in intra-data
center (ICE-D) applications and which are particularly suited to AI
workloads which can become a very attractive long-term growth
opportunity. Overall, the acquisition offers an opportunity for a
step change in Nokia’s penetration into webscale customers.
- Net comparable operating profit synergies of EUR 200
million: The combination is expected to deliver EUR 200
million of net comparable operating profit synergies by 2027*.
Approximately one third of the synergies are expected to come from
cost of sales due to supply chain efficiencies and the remainder
from operating expenses due to portfolio optimization and
integration along with reduced product engineering costs and
standalone entity costs. Nokia expects one-time integration costs
of approximately EUR 200 million related to the transaction.
- Creating value for shareholders: The
transaction is expected to be accretive to Nokia’s comparable
operating profit and EPS in year 1 and to deliver more than 10%
comparable EPS accretion in 2027*. Nokia also expects the deal to
deliver a return on invested capital (RoIC) comfortably above
Nokia’s weighted average cost of capital (WACC). In addition,
Infinera’s investors will have the opportunity to participate in
the exciting upside of investing in a global leader in optical
networking solutions.
Transaction details Under the terms of the
definitive agreement, Nokia is acquiring Infinera for $6.65 per
share, which equates to an enterprise value of $2.3 billion. For
each Infinera share, Infinera shareholders will be able to elect to
receive either: 1) $6.65 cash, 2) 1.7896 Nokia shares, or 3) a
combination of $4.66 in cash and 0.5355 Nokia shares for each
Infinera share. All Nokia shares will be issued in the form of
American Depositary Shares. The definitive agreement includes a
proration mechanism so that the Nokia shares issued in the
transaction do not exceed an amount equal to approximately 30% of
the aggregate consideration that may be paid to Infinera
shareholders.
In conjunction with this transaction, Nokia’s Board of Directors
has committed to increasing and accelerating Nokia’s on-going share
buyback program to mitigate any dilution from the equity component
of the acquisition. This will be in addition to Nokia’s on-going
EUR 600 million buyback program.
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.
Oaktree Optical Holdings, L.P., which owned approximately 11% of
Infinera common stock as of 27 June 2024, has agreed to vote their
shares in favor of the transaction.
*References to the 2027 timeline for net operating profit
synergies and EPS accretion are based on the transaction closing
during the first half of 2025. Any delay to the closing of the
transaction could impact the timing of realizing the targeted
synergies.
AdvisorsPJT Partners served as financial
advisor to Nokia. Skadden, Arps, Slate, Meagher & Flom LLP and
Roschier, Attorneys Ltd served as legal advisors.
Centerview Partners LLC is acting as exclusive financial advisor
to Infinera. Wilson Sonsini Goodrich & Rosati, Professional
Corporation served as legal advisor.
Conference call detailsNokia will host a
conference call on Friday 28 June at 09:00 am Helsinki / 07:00 am
UK Time (11:00 pm Pacific Time on 27 June) to discuss the
transaction.
The event will be webcast and attendees only wishing to listen
to the call are encouraged to join this way where they will be able
to listen to the call and view the accompanying slides. The
presentation slides will also be available to download at
www.nokia.com/investors.
To join the webcast follow this link:
https://edge.media-server.com/mmc/p/7yaea3qj
The call will include a Q&A session and we encourage
analysts who wish to ask a question to pre-register for
the conference call using the link below. Participants
who pre-register will be given a conference passcode and unique PIN
to gain immediate access to the call and bypass the
operator.
Participants may pre-register at any time, including up to and
after the call start time.
To
pre-register: https://dpregister.com/sreg/10190379/fcf4b207d2
For those who do not wish to pre-register, please use the
following dial-in numbers and ask for the “Nokia Conference
Call”:
PARTICIPANT DIAL IN (TOLL FREE): |
1-844-282-4574 |
|
|
PARTICIPANT INTERNATIONAL DIAL IN: |
1-412-317-5619 |
|
|
UK: |
44-20-3795-9972 |
|
|
About NokiaAt Nokia, we create technology that
helps the world act together.
As a B2B technology innovation leader, we are pioneering
networks that sense, think and act by leveraging our work across
mobile, fixed and cloud networks. In addition, we create value with
intellectual property and long-term research, led by the
award-winning Nokia Bell Labs.
Service providers, enterprises and partners worldwide trust
Nokia to deliver secure, reliable and sustainable networks today –
and work with us to create the digital services and applications of
the future.
Inquiries:
Nokia Communications, CorporatePhone: +358 10 448 4900Email:
press.services@nokia.comMaria Vaismaa, Global Head of External
Communications
Nokia Investor RelationsPhone: +358 4080 3 4080Email:
investor.relations@nokia.com
About Infinera Infinera is a global supplier of
innovative open optical networking solutions and advanced optical
semiconductors that enable carriers, cloud operators, governments,
and enterprises to scale network bandwidth, accelerate service
innovation, and automate network operations. Infinera solutions
deliver industry-leading economics and performance in long-haul,
submarine, data center interconnect, and metro transport
applications. In 2023 Infinera, which reports based on US-GAAP
accounting standards, generated USD 1.61 billion in revenue which
grew 3% compared to the USD 1.57 billion in 2022. In 2023 the
company reported a US-GAAP loss from operations of USD 5 million
compared to a loss of USD 60 million in 2022. Infinera reported a
-0.3% US-GAAP operating margin in 2023 which improved 3.5
percentage points from the -3.8% reported in 2022. As of 30
December 2023 Infinera’s balance sheet had cash and cash
equivalents of USD 173 million and debt of USD 684 million. To
learn more about Infinera including the company’s historic
financial performance, visit www.infinera.com, follow us on X
and LinkedIn, and subscribe for updates.
Additional Information and Where to Find It;
Participants in the SolicitationInfinera Corporation
(“Infinera”), the members of Infinera’s board of directors and
certain of Infinera’s executive officers are participants in the
solicitation of proxies from stockholders in connection with the
pending acquisition of Infinera (the “Transaction”). In connection
with the Transaction, Nokia Corporation (“Nokia”) intends to file
with the U.S. Securities and Exchange Commission (the “SEC”) a
registration statement on Form F-4 that will include a proxy
statement of Infinera and that also will constitute a prospectus of
Nokia with respect to shares of Nokia’s ordinary shares to be
issued in the Transaction, which will be represented by American
depositary shares (such registration statement, the “Proxy
Statement/Prospectus”).Christine Bucklin, Greg Dougherty, David
Heard, Sharon Holt, Roop Lakkaraju, Paul Milbury, Amy Rice, George
Riedel and David Welch, all of whom are members of Infinera’s board
of directors, and Nancy Erba, Infinera’s chief financial officer,
are participants in Infinera’s solicitation. Information regarding
such participants, including their direct or indirect interests, by
security holdings or otherwise, will be included in the Proxy
Statement/Prospectus and other relevant documents to be filed with
the SEC in connection with the Transaction. Additional information
about such participants is available under the captions “Our Board
of Directors,” “Our Pay” and “Our Stockholders—Security Ownership
of Certain Beneficial Owners and Management” in Infinera’s
definitive proxy statement in connection with its 2024 Annual
Meeting of Stockholders (the “2024 Proxy Statement”), which was
filed with the SEC on May 17, 2024 (which is available at
https://www.sec.gov/ix?doc=/Archives/edgar/data/1138639/000113863924000128/infn-20240517.htm),
as amended on June 4, 2024 (available at
https://www.sec.gov/Archives/edgar/data/1138639/000113863924000162/infn2024proxystatementdef1.htm).
To the extent that holdings of Infinera’s securities have changed
since the amounts printed in the 2024 Proxy Statement, such changes
have been or will be reflected on Statements of Change in Ownership
on Form 4 filed with the SEC (which are available at
https://www.sec.gov/cgi-bin/own-disp?action=getissuer&CIK=0001138639).
Information regarding Infinera’s transactions with related persons
is set forth in the 2024 Proxy Statement under the caption “Certain
Relationships and Related Party Transactions.” Certain illustrative
information regarding the payments to that may be owed, and the
circumstances in which they may be owed, by Infinera to its named
executive officers in a change of control of Infinera is set forth
in the 2024 Proxy Statement under the caption “Estimated Payments
and Benefits Upon Termination, Change of Control or
Death/Disability.”
Promptly after the Proxy Statement/Prospectus is declared
effective by the SEC, Infinera will mail the Proxy
Statement/Prospectus and a WHITE proxy card to each stockholder
entitled to vote at the special meeting to consider the
Transaction. BEFORE MAKING ANY VOTING OR INVESTMENT DECISION,
SECURITY HOLDERS OF INFINERA AND NOKIA ARE URGED TO READ THE PROXY
STATEMENT/PROSPECTUS (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS
THERETO) AND ANY OTHER RELEVANT DOCUMENTS THAT INFINERA OR NOKIA
WILL FILE WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION ABOUT INFINERA, NOKIA AND THE
TRANSACTION.
Stockholders may obtain free of charge, when filed, the Proxy
Statement/Prospectus, any amendments or supplements thereto, and
any other relevant documents filed by Infinera or Nokia with the
SEC in connection with the Transaction at the SEC’s website
(http://www.sec.gov). Copies of the Proxy Statement/Prospectus, any
amendments or supplements thereto, and any other relevant documents
filed by Infinera with the SEC in connection with the Transaction
will also be available, free of charge, at Infinera’s investor
relations website (https://investors.infinera.com/), or by emailing
Infinera’s investor relations department (apassi@infinera.com).
Copies of the Proxy Statement/Prospectus, any amendments or
supplements thereto, and any other relevant documents filed by
Nokia with the SEC in connection with the Transaction will also be
available, free of charge, at Nokia’s investor relations website
(https://www.nokia.com/about-us/investors/), or by emailing Nokia’s
investor relations department (investor.relations@nokia.com).
No Offer or SolicitationThis communication is
not a proxy statement or solicitation of a proxy, consent or
authorization with respect to any securities or in respect of the
Transaction and does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of
any vote of approval, and there will not be any sale of securities
in any jurisdiction in which such offer, solicitation or sale would
be unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offering of securities
will be made except by means of a prospectus meeting the
requirements of Section 10 of the U.S. Securities Act of 1933.
Cautionary Note Regarding Forward-Looking
Statements Certain statements contained in this
communication may be characterized as forward-looking under the
Private Securities Litigation Reform Act of 1995. These statements
involve a number of risks, uncertainties and other factors that
could cause actual results to differ materially.
Statements in this communication that are forward-looking may
include statements regarding: (1) the transaction between Nokia and
Infinera (the “Transaction”); (2) the expected timing of the
closing of the Transaction; (3) considerations taken into account
in approving and entering into the Transaction; (4) the anticipated
benefits to, or impact of, the Transaction on Nokia’s and
Infinera’s businesses; and (5) expectations for Nokia and Infinera
following the closing of the Transaction. There can be no assurance
that the Transaction will be consummated.
Risks and uncertainties that could cause actual results to
differ materially from those indicated in the forward-looking
statements, in addition to those identified above, include: (1) the
possibility that the conditions to the closing of the Transaction
are not satisfied, including the risk that required approvals from
Infinera’s stockholders for the Transaction or required regulatory
approvals to consummate the Transaction are not obtained, on a
timely basis or at all; (2) the occurrence of any event, change or
other circumstance that could give rise to a right to terminate the
Transaction; (3) possible disruption related to the Transaction to
the current plans, operations and business relationships of Nokia
and Infinera, including through the loss of customers and
employees; (4) the amount of the costs, fees, expenses and other
charges incurred by Nokia and Infinera related to the Transaction;
(5) the possibility that the stock prices of Nokia or Infinera
could fluctuate during the pendency of the Transaction and may
decline if the Transaction is not completed; (6) for both Nokia and
Infinera, the possible diversion of management’s time and attention
from ongoing business operations and opportunities; (7) the
response of competitors and other market participants to the
Transaction; (8) potential litigation relating to the Transaction;
(9) uncertainty as to the timing of completion of the Transaction
and the ability of each party to consummate the Transaction; and
(10) the other risks and uncertainties detailed in the periodic
reports that Nokia and Infinera file with the SEC. All
forward-looking statements in this communication are based on
information available to Nokia and Infinera as of the date of this
communication, and, except as required by law, neither Nokia nor
Infinera assumes any obligation to update the forward-looking
statements provided to reflect events that occur or circumstances
that exist after the date on which they were made.
- Correction: Inside Information: Nokia to acquire Infinera to
increase scale in Optical Networks and accelerate product
roadmap
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