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Investing.com -- Nokia (HE:NOKIA) stock surged 17% in Helsinki trading after the Finnish telecommunications company announced a $1 billion equity investment from NVIDIA (NASDAQ:NVDA) as part of a new strategic partnership. Trading of Nokia’s American Depositary Receipts was halted in New York ahead of the announcement.
The investment will see NVIDIA subscribe for 166,389,351 new Nokia shares at a price of $6.01 per share, making the AI chipmaker a 2.90% shareholder in Nokia. The companies will collaborate to shape and lead the AI-RAN (Radio Access Network) market and support the evolution of data center networking.
Nokia plans to use the proceeds to accelerate its strategic initiatives in advancing trusted connectivity for what it calls the "AI supercycle" and other corporate purposes. Specifically, Nokia intends to speed up development of its 5G and 6G RAN software to run on NVIDIA’s architecture and increase its presence in the AI and cloud market with data center networking solutions.
As part of the partnership, the companies will collaborate on AI networking solutions and explore opportunities to incorporate Nokia’s data center switching and optical technologies in NVIDIA’s future AI infrastructure architecture.
The directed share issuance, which represents approximately 2.98% of Nokia’s total shares prior to the issuance, is expected to be completed in November following registration with the Finnish Trade Register. The new shares will subsequently be admitted to trading on Nasdaq Helsinki, Euronext Paris, and the New York Stock Exchange in the form of American Depositary Shares.
Nokia’s Board of Directors determined there was a "weighty financial reason" for deviating from shareholders’ pre-emptive rights in the share issuance, noting that the strategic partnership, including the share issuance, benefits Nokia and its shareholders.