It’s official. The long-rumored mashup between the two European telecom equipment giants Alcatel-Lucent and Nokia was announced by the firms on Wednesday, April 15th.
Finland-based Nokia said that it had agreed to an all-stock deal to purchase French telecommunications firm Alcatel-Lucent for close to $16.6 billion.The new company will morph the world’s second-largest telecom equipment manufacturer after Sweden’s Ericsson, with total revenues topping $27 billion and operations throughout Asia, Europe and North America.
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The current CEO of Nokia, Rajeev Suri, will head up the new firm, which anticipates synergies to result in close to $1 billion a year in cost savings by 2019.
Statement from Nokia CEO
“Together, Alcatel-Lucent and Nokia intend to lead in next-generation network technology and services,” CEO Suri noted in a statement released Wednesday morning. “We will have a strong presence in every part of the world, including leading positions in the United States and China.”
Further details on Nokia – Alcaltel-Lucent merger
As reported by ValueWalk, the announcement of a merger followed the firms public admission on Tuesday that they were in advanced negotiations over a possible buyout. Industry analysts point out that this deal is just the latest in a series of recent mergers in the rapidly evolving telecom sector, and that the new combined firm will be better positioned to compete with global competitors.
Nokia highlighted that it was offering 0.55 of a new share for each Alcatel-Lucent share, close to a one-third premium to the firm’s share price before knowledge of the deal was generally disseminated.
Of note, shares of Finnish Nokia were up around 3.1%, while shares of Alcatel-Lucent were down by 10.9%.
The companies noted that the merger is anticipated to be finalized in the first half of next year. The final terms of the deal call for Nokia shareholders to own 66.5% of the new telcom equipment enterprise and Alcatel-Lucent owners ending up with the remaining third of the firm.