Nokia Buys Alcatel-Lucent for $16.5 Billion

Posted by | 16/04/2015 | Telecom News

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Nokia has confirmed fevered speculation, and is to pay EUR15.6 billion (USD16.5 billion) to buy Alcatel Lucent, while also confirming that it is looking to sell its digital mapping division,Here.

Nokia is paying for Alcatel-Lucent in shares, which leaves its cash pile unaffected by the transaction, and the price is roughly a 34% premium over Alcatel-Lucent’s share price average over the past three months.

Alcatel-Lucent shareholders would own 33.5% of the enlarged company, with Nokia shareholders holding the rest.

The merged company will end up with more than 40,000 R&D employees and would have spent EUR 4.7 billion in R&D in 2014. The merged company will however seek to cut costs by around EUR900 million by 2019.

Alcatel-Lucent and Nokia have highly complementary portfolios and geographies, with particular strength in the United States, China, Europe and Asia-Pacific. They will also bring together the best of fixed and mobile broadband, IP routing, core networks, cloud applications and services. This combination is expected to create access to an expanded addressable market with improved long term growth opportunities.

The combined company will be positioned to target a larger addressable market with an improved growth profile. Based on Nokia estimates, the addressable market of the combined company in 2014 was approximately 50% larger than the current addressable networks market for Nokia alone, increasing from approximately EUR 84 billion to approximately EUR 130 billion.

The combined company will be called Nokia Corporation, with headquarters in Finland and a strong presence in France. Risto Siilasmaa is planned to serve as Chairman, and Rajeev Suri as Chief Executive Officer. The combined company’s Board of Directors is planned to have nine or ten members, including three members from Alcatel-Lucent, one of whom would serve as Vice Chairman.

Rajeev Suri, President and Chief Executive Officer of Nokia, 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.”

Each company’s Board of Directors has approved the terms of the proposed transaction, which is expected to close in the first half of 2016.


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