Nokia announced that it will be acquiring its French rival Alcatel-Lucent for €15.6 billion (£11.2 billion).
The Finnish company said that for every Alcatel share it would offer 0.55 new shares, translating into €4.27 a share (a 28% premium over Alcatel’s average price over the last three months).
Alcatel-Lucent shareholders will own 33.5% of the new combined firm, while Nokia shareholders will own 66.5%.
Each company’s Board of Directors has approved the terms of the proposed transaction and expect it to be completed in the first half of 2016.
The merger will create a Finnish-French telecoms equipment group giant, worth over €40bn (£29bn), to rival the likes of Ericsson and Huawei. The combined firm will have a market share of 35%, second only to Ericsson, which has a market share of 40%, according to Bernstein Research.
The combined business will be called Nokia Corporation. It will be headquartered in Finland but also have a strong presence in France. Risto Siilasmaa is planned to serve as Chairman, and Rajeev Suri as Chief Executive Officer
Nokia said that “with more than 40 000 R&D employees and spend of EUR 4.7 billion in R&D in 2014, the combined company will be in a position to accelerate development of future technologies including 5G, IP and software-defined networking, cloud, analytics as well as sensors and imaging.”
Michel Combes, Chief Executive Officer of Alcatel-Lucent, commented:
“A combination of Nokia and Alcatel-Lucent will offer a unique opportunity to create a European champion and global leader in ultra-broadband, IP networking and cloud applications. I am proud that the joined forces of Nokia and Alcatel-Lucent are ready to accelerate our strategic vision, giving us the financial strength and critical scale needed to achieve our transformation and invest in and develop the next generation of network technology.”
Adding:
“This transaction comes at the right time to strengthen the European technology industry. We believe our customers will benefit from our improved innovation capability and incomparable R&D engine under the Bell Labs brand. The global scale and footprint of the new company will reinforce its presence in the United States and China.”