Nokia buys Alcatel-Lucent

Networking suppliers hook up in £11.2bn deal with grand aims when it comes to network innovation

Barely 24 hours after confirming they were in advanced acquisition talks, Nokia has announced it is to buy French networking supplier Alcatel-Lucent in a deal valuing it at €15.6bn (£11.2bn).

The boards of both suppliers have already approved the terms and conditions of the proposed transaction, although it will still have to pass scrutiny by shareholders and various regulators.

In a statement, Nokia said the new company would be well-positioned to “create the foundation of seamless connectivity for people and things”.

It claimed it would have unparalleled innovation capabilities through the combination of Alcatel-Lucent’s Bell Labs and Nokia’s FutureWorks. 

In its acquisition announcement, Nokia said it hoped to establish a €100m fund to invest in internet of things startups in France following the closure of the deal, which is expected towards the end of the 2015.

The duo also spoke of “highly complementary” portfolios around fixed and mobile broadband technology, IP routing, core networking, and cloud apps and services. Nokia said it expected its addressable market would be roughly half as big again as its current market.

“We expect to have the scale to lead in every area in which we choose to compete, drive profitable growth, meet the needs of global customers, develop new technologies, build on our successful intellectual property licensing and create value for our shareholders,” said Nokia president and CEO Rajeev Suri.

European champion

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Michel Combes, CEO of Alcatel-Lucent, which like Nokia has had a rough ride in the past decade, said the deal came at the right time to strengthen the European technology industry.

“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,” he said.

The combined company will be called Nokia Corporation and will be headquartered in Finland, although it will retain a strong presence in France. Nokia’s Suri will continue to serve as CEO alongside chairman Risto Siilasmaa, with a vice-chairman to be appointed from Alcatel-Lucent.

Separately, Nokia confirmed it was exploring a review of strategic options for its Here online mapping business, which has become the subject of speculation over its future.

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