EU Approves Nokia's $2.3 Billion Takeover of Infinera: A Strategic Move for Optical Networking Dominance

The European Commission has given the green light to Nokia's $2.3 billion acquisition of Infinera, a significant move that will reshape the competitive landscape in the optical networking market. This strategic merger, expected to close by the end of February 2025, will create a formidable player in the industry, challenging Huawei's market dominance and offering customers a more competitive alternative.

Nokia's acquisition of Infinera is a strategic play to strengthen its Optical Networks business and expand its customer base, particularly in the webscale segment. By merging with Infinera, Nokia will gain access to a broader portfolio of optical networking solutions and a more diverse customer base, including hyperscalers and cloud operators. This move aligns with Nokia's long-term goal of achieving a double-digit operating margin in its Optical Networks business and mid-single digit organic growth for the overall Network Infrastructure business.

The acquisition is expected to deliver significant synergies and cost savings, with Nokia targeting net comparable operating profit synergies of EUR 200 million by 2027. The combined businesses have a strong strategic fit, given their highly complementary customer, geographic, and technology profiles, which will create significant value for shareholders. The transaction is projected to be accretive to Nokia's comparable operating profit and EPS in the first year post-close and to deliver over 10% comparable EPS accretion by 2027.



Infinera's expertise in optical semiconductors and networking equipment will complement Nokia's existing portfolio, creating a more robust offering for customers. The combined entity will have a broader portfolio, enhanced scale, and extended geographic reach, leveraging vertically integrated optical semiconductor technologies developed in the United States. This will enable Nokia to sell more equipment to hyperscalers, which are investing heavily in data centers, contributing to its long-term financial growth.

The acquisition will also accelerate Nokia's data center push, a critical area for the company's future growth. With the appointment of Intel data center executive Justin Hotard as its CEO, Nokia is well-positioned to capitalize on the growing demand for data center networking solutions and services. The company has already made significant strides in this area, extending its agreement to supply Microsoft Azure with data center routers and switches and announcing plans to offer advanced data center networking solutions and services to global enterprises.

In conclusion, the EU's approval of Nokia's acquisition of Infinera is a strategic move that will significantly impact the competitive landscape in the optical networking market. By merging with Infinera, Nokia will strengthen its Optical Networks business, expand its customer base, and achieve its long-term financial goals. This acquisition is a testament to Nokia's commitment to innovation and growth in the rapidly evolving optical networking market.