Breaking news comes with a hipe that Nokia planning to buy the Telecommunications equipment company for €15.6 billion, translates to $16.6 billion US dollars. Nokia is officially in talks to buy Alacatel-Lucent, and confirmed that it was in advanced position to acquire telecommunication company. More details on Nokia to buy Alcatel-Lucent can be grabbed after this jump.
In an all-share deal that values its smaller French rival at 15.6 billion euros, building up its telecom equipment business to compete with market leader Ericsson, Nokia is planning to purchase Alacatel-Lucent, which will redefine a telecom sector suffering weak growth prospects and pressure from low-cost Chinese players Huawei and ZTE.
Nokia’s takeover of Alcatel-Lucent is a combined company, which will have about 114,000 employees and combined sales of around 26 billion euros. If this acquisition comes true, then in mobile equipment it will rank a strong second, with global market share of 35 percent, behind Sweden’s Ericsson with 40% and ahead of Huawei’s 20 percent, according to Bemstein Research.
The Finnish company is offering its shares in exchange for Alacatel-Lucent shares at 0.55 to 1 ratio. Current Alcatel-Lucent shareholders will end up with 33.5% of the combined company, Nokia shareholders will have the other 66.5%. Although, the deal has been approved by the Board of Directors of each company and is expected to close in the first half of 2016, while p[ending approval by Nokia’s shareholders, regulatory bodies and other considerations.
The new Nokia will have a stronger exposure to the important North American market, with key contracts with AT&T and Verizon. Important to note is that Alcatel-Lucent is not connected to the Alcatel phones other than by name, Alcatel manufacturers networking equipment similar to Nokia Networks. So that if both mix together, will tackle the development of 5G tech, the Internet of Things and the increased reliance on cloud services.
Both the Nokia and Alcatel-Lucent have strong presence in the US, Europe, China and the Asia Pacific and work on anything from core networks to cell networks. The combined sales of the two companies comes out to €25.9 billion with a non-IFRS profit of €2.3 billion.
The company will be however to be called Nokia Corporation and keep the headquarters in Finland, nevertheless a strong presense in France to say. Current Nokia CEO Rajeev Suri will keep this position in the new company, Chairman Risto Siilasmaa will keep his post alive.
Notably, this Nokia Alcatel-Lucent buyout news comes from when Nokia decided to sell out its HERE Maps app service and the press release says the company is reviewing its strategic options, which “may or not lead to a transaction.” And today, it has confirmed that it is one it way to buy Alacatel-Lucent. The deal will be finalised in the first half of 2016 and is expected to result in 900 million euros of operating cost savings by the end of 2019.