Nokia Corporation
Inside Information
27 June 2024 at 23:50 EEST
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.
Advisors
PJT 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 details
Nokia 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 (http://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 Nokia
At 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, Corporate
Phone: +358 10 448 4900
Email: press.services@nokia.com (mailto:press.services@nokia.com)
Maria Vaismaa, Global Head of External Communications
Nokia Investor Relations
Phone: +358 4080 3 4080
Email: investor.relations@nokia.com (mailto: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. To learn more about Infinera,
visit www.infinera.com, follow us on X and LinkedIn, and subscribe for updates.
Additional Information and Where to Find It; Participants in the Solicitation
Infinera 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
(mailto:investor.relations@nokia.com)).
No Offer or Solicitation
This 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.
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