Nokia (NYSE:NOK) has agreed to acquire California-based data centre networking business Infinera (NASDAQ:INFN) in a deal worth $2.3 billion.
It is a premium-priced deal, at $6.65, pitched around 28% above Infinera’s closing price on Thursday.
The Nordic telecoms firm is to pay 70% in cash, with the rest paid in shares, for the company is seen as bolstering Nokia’s position to benefit from rising demand created through the adoption of AI.
The so-called ‘picks and shovel’ industries supporting the AI boom are seen as key opportunities for consolidation.
By acquiring Infinera, Nokia is seen as become the world’s second-largest vendor in the optical networking market, with a 20% market share – whilst China’s Huawei is the leader in the market vertical.
Pekka Lundmark, Nokia chief executive, described the deal as “a strong strategic fit”.
“We believe now is the right time to take a compelling inorganic step to further expand Nokia’s scale in optical networks,” Lundmark said in a statement.
Infinera chief executive, meanwhile, added: “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.”
In New York, Nokia was up 1.75% at $3.80, whilst Infinera stock gained 18% to $6.22.
