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INFN Stock Alert: Nokia Boosts Infinera With $2.3 BILLION Buy

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Infinera (NASDAQ:INFN), a maker of optical equipment, is soaring today on news that Nokia (NYSE:NOK) will acquire it in a $2.3 billion deal. Nokia appears to have decided to acquire Infinera in order to double down on its artificial intelligence (AI) data center business and compete more effectively with Huawei and Ciena (NYSE:CIEN). In early trading, INFN stock is climbing 18%.

The Deal Boosts Nokia’s Presence in Optical Networking

As a result of the acquisition, Nokia will become the second-largest player in the global networking sector, moving ahead of Ciena. In the wake of the deal, Nokia will trail only China’s Huawei, which is dominant in its home market.

Following the transaction, Nokia will be able to obtain more revenue from huge tech firms, including Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) and Microsoft (NASDAQ:MSFT). Specifically, the firm thinks that the deal will increase its sales from the data centers operated by those firms. Data centers deploy optical equipment in order to enable their systems to communicate.

The acquisition is expected to raise Nokia’s profits in the first year of the deal, while Nokia anticipates that Infinera will increase its bottom line by more than 10% by 2027.

Additionally, the transaction will allow Nokia to develop more products and release its new offerings faster while developing more competitive systems, the telecom equipment firm stated.

INFN Stock: A 26% Premium

The $2.3 billion price tag was 26.4% higher than the value of INFN stock as of yesterday’s market close.

Under the terms of the deal, Nokia will pay at least 70% of the acquisition price in cash. The owners of INFN stock can elect to receive as much as 30% of their payments in the form of NOK stock.

Heading into today, NOK stock had fallen 4% in the preceding month while climbing 5% in the last three months. It had advanced 9% in 2024.

On the date of publication, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been SMCI, INTC, and MGM. You can reach him on Stocktwits at @larryramer.

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