Finnish company, Nokia has acquired Alcatel-Lucent for 15.6 billion euros ($16.6 billion) to compete with telecom equipment market leader Ericsson. Nokia and Alcatel-Lucent have entered into a memorandum of understanding under which Nokia would make an offer for all the equity securities issued by Alcatel-Lucent, through a public exchange offer in France and in US.
Nokia buys Alcatel-Lucent
The acquisition of Alcatel by Nokia would redefine a sector which is suffering with weak growth prospects and immense pressure from low-cost Chinese players like Huawei and ZTE. With the acquisition, Nokia’s employee strength would shoot up to 114,000. New Nokia would have very stronger exposure in the North American market with major AT&T and Verizon contracts.
President and Chief Executive Officer of Nokia, Mr Rajeev Suri in a press statement said,
Together, Alcatel-Lucent and Nokia intend to lead in next-generation network technology and services, with the scope to create seamless connectivity for people and things wherever they are.
Our innovation capability will be extraordinary, bringing together the R&D engine of Nokia with that of Alcatel-Lucent and its iconic Bell Labs. We will continue to combine this strength with the highly efficient, lean operations needed to compete on a global scale.
For all these reasons, I firmly believe that this is the right deal, with the right logic, at the right
Chief Executive Officer of Alcatel-Lucent, Michel Combes added,
The proposed transaction represents a compelling offer for our shareholders both in terms of upfront premium and long term value creation potential. Shareholders of Alcatel-Lucent now have the opportunity to participate in the future upside of the industrial project that they have supported during the last two years, through a stronger combined business with greater global scale and a better position for the longer term. The new company will also provide our employees exciting opportunities to be part of a global leader
The acquisition fills gaps in Nokia’s product portfolio sector with Alcatel-Lucent’s technology in Internet routers and optical transmission that help telecom operators to handle the growing consumption of data by the smartphone users.
The deal would be finalised in the first half of 2016.