Nokia To Buy Alcatel-Lucent Share In $16.6 Billion

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Finnish network equipment maker Nokia said it has agreed to buy Alcatel-Lucent in an all-share transaction that values the smaller French rival at 15.6 billion euros ($16.58 billion).

Nokia and Alcatel-Lucent announce today their intention to combine to create an innovation leader in next generation technology and services for an IP connected world. The two companies have entered into a memorandum of understanding under which Nokia will make an offer for all of the equity securities issued by Alcatel-Lucent, through a public exchange offer in France and in the United States, on the basis of 0.55 of a new Nokia share for every Alcatel-Lucent share.

Nokia & Alcatel-lucent

Nokia also stressed that innovation would continue to be key at the two firms. “The combined company will have unparalleled innovation capabilities, with Alcatel-Lucent’s Bell Labs and Nokia’s FutureWorks, as well as Nokia Technologies, which will stay as a separate entity with a clear focus on licensing and the incubation of new technologies.”

Alcatel-Lucent is known for producing, amongst other products and services, cheap handsets. Could this mean Nokia is considering taking a slice of the lucrative developing market pie? Bloomberg speculate that a potential buyout could be funded by the sale of Nokia’s HERE mapping division — with Alcatel-Lucent valued at around $13 billion, Nokia would need to find almost twice the amount of money it received from Microsoft.

Nokia shares fell as much as 7 per cent on Tuesday after its interest in the loss-making Alcatel-Lucent was announced, while the French firm leaped 16 per cent.

Nokia sold its once-dominant handset business last year after struggling to compete with smartphones by Apple and Samsung. That deal left it with the network unit, a smaller map unit and a bunch of technology patents.

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