Pushkin+Nokia
Network equipment maker Nokia has bought French telecommunications equipment company Alcatel-Lucent for €15.6 billion or $16.58 billion in an all share deal. Through a public exchange offer in France and the US, the Finnish company will make an offer for all of the equity securities issued by Alcatel-Lucent on the basis of 0.55 of a new Nokia share for every Alcatel-Lucent share. The deal is expected to close in the first half of 2016.

Alcatel-Lucent shareholders would own 33.5% of the fully diluted share capital of the combined company, and Nokia shareholders would own 66.5%, assuming full acceptance of the public exchange offer. 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 newly combined company will be looking at investing in the next generation of 5G network equipment and enabling Internet of Things.

 

Reuters reports that combined, the company will have about 114,000 employees and combined sales of around 26 billion euros. The report added that Alcatel-Lucent has some 6,000 employees in France and maintaining jobs was a key demand of the French government for its backing of the deal. The deal also included protecting two research and development sites at Villarceaux and Lannion.

“With more than 40 000 R&D employees and a spend of €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,” Nokia said in its statement. It added that Alcatel’s key offices in France, Germany, the U.S. and China will be retained.

It’s worth remembering that in the quarter ended December 2014, Nokia posted an operating profit of €454 million, up 66% y-o-y on the back of strong performance of network equipment and services business and HERE business. Nokia networks reported a net sales of €3.4 billion which grew 8% y-o-y. Nokia had mentioned that had 162 commercial LTE contracts and was a key LTE radio supplier to 15 of the world’s top 20 LTE operators.

HERE business sale
Separately, Nokia also said that it has initiated a review of strategic options for its HERE business. “That review is ongoing, it may or may not lead to a transaction, and any further announcements about HERE will be made in due course, as appropriate,” the statement read. In the December 2014 quarter, HERE achieved 15% year-on-year growth in net sales to €292 million in Q4 2014. HERE also has an agreement with Baidu, the Chinese Internet search provider, to power its new desktop and mobile map services outside of China.

TechCrunch also notes that HERE is the last consumer-facing business it retained following the $7.2 billion sale of its devices and services business to Microsoft in April.