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You are here: Home / Business Briefing / Nokia Buys Alcatel-Lucent for $16.6B
Nokia Buys Alcatel-Lucent for $16.6 Billion
Nokia Buys Alcatel-Lucent for $16.6 Billion
By Shirley Siluk / CRM Daily Like this on Facebook Tweet this Link thison Linkedin Link this on Google Plus
PUBLISHED:
APRIL
15
2015
In an all-stock deal valued at 15.6 billion Euros, or about $16.6 billion, Nokia plans to acquire Alcatel-Lucent and position the combined company as an "innovation leader in next-generation technology and services for an IP-connected world." The acquisition, which is subject to shareholder and regulatory approval, is expected to close during the first half of 2016.

Today's announcement follows widespread speculation in the press about a pending deal. In fact, both companies on Tuesday issued statements confirming they were in talks but added, "there can be no certainty at this stage."

According to the companies, Nokia and Alcatel-Lucent have "highly complementary portfolios and geographies" that will help them expand their combined global markets and improve their chances for long-term growth. Both firms have seen dramatically changing fortunes in recent years as rapid changes in the telecommunication industry have eroded their positions as innovation leaders.

'Right Deal at the Right Time'

Combining the two companies would bring together "the R&D engine of Nokia with that of Alcatel-Lucent and its iconic Bell Labs," said Rajeev Suri (above, left), President and CEO of Finland-based Nokia. "I firmly believe that this is the right deal, with the right logic, at the right time."

The new company will gain "the financial strength and critical scale needed to achieve our transformation and invest in and develop the next generation of network technology," said Michel Combes (above, right), CEO of Alcatel-Lucent.

Nokia was the world's largest maker of mobile phones until it was overtaken by Samsung in 2012. It sold its mobile phone business to Microsoft in 2013. Alcatel-Lucent was created in 2006 by the merger of Alcatel and Lucent Technologies, which was spun off by AT&T. Lucent's divisions included Bell Labs, which in the early days of telephony was synonymous with technological innovation.

50% Larger Market Reach

By joining forces with Alcatel-Lucent, Nokia is banking on gaining a global market that is about 50 percent larger than it had by itself last year. It places the value of that market at around 130 billion Euros, or approximately $139 billion.

The combined companies are also projected to achieve new cost "synergies" that will save some 900 million Euros, or $961 million, in 2019. In addition to reduced overhead and improved purchasing capabilities, those savings will likely include job cuts through "organizational streamlining."

"A combination of Nokia and Alcatel-Lucent's wireless assets made sense in a mobile infrastructure market which is highly competitive and suffers strong price pressures," noted an analyst with the Swiss research firm AtonRa Partners on the investment site Seeking Alpha. The writer added that although the announcement of a full merger came as a surprise, it promised to increase Nokia's exposure in "promising segments such as IP routing, SDN and NFV, in which Alcatel-Lucent is the number [two] player, behind Cisco."

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Aleksandr:
Posted: 2015-05-18 @ 12:27am PT
I wonder if this deal with Nokia will enable Alcatel-Lucent to grow in other areas too. Their webinar next week should give us plenty of answers! Peter Johnson (Utility Markets Vice President) and Dominique Verhulst (IP Business EMEA Vertical Markets Director) are presenting so should be very interesting to hear their views!

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