Nokia confirms Alcatel-Lucent acquisition

Nokia has launched a €15.6bn agreed all-share takeover offer for Alcatel-Lucent aimed at creating a Finnish-French rival to Ericsson and Huawei in the telecoms equipment industry.

The Finnish company said on Wednesday that it would offer 0.55 new shares in Nokia for every Alcatel share, which it said was equivalent to €4.27 a share, a 28 per cent premium over the French group's average stock price over the past three months.

Nokia's chief executive and chairman will both continue in their jobs in the new company - to be called Nokia Corporation - and the Finnish group's shareholders will own about 66.5 per cent of the combined business, which will remain headquartered just outside Helsinki.

The deal is expected to close in the first half of next year, with the two companies targeting €900m of cost synergies by 2019 and €200m in reduced interest expenses by 2017.

It has been greeted with some scepticism among Nokia shareholders and former executives, who remember not only the difficult tie-up between the Finnish group and Siemens' telecoms equipment assets but also the long struggle to merge Alcatel and Lucent successfully.

Nokia's shares fell 3.6 per cent on Tuesday to €7.49 while Alcatel's rose 16 per cent to €4.48. Based on Tuesday's closing prices, Nokia's offer is worth €4.12 per Alcatel share.

"Doing merger with Alcatel crazy . . . Alcatel-Lucent is and will be a mess [plus the] French government," Juha-Pekka Helminen, Nokia's former strategy director, wrote on Twitter, reflecting concern in Finland about French political meddling in a combined company.

Emmanuel Macron, France's economy minister, backed the proposed acquisition on Tuesday in a shift of tone over cross-border tie-ups, saying: "It's a good move for Alcatel-Lucent because it is a move for the future."

The combined company would have had revenues of €25.9bn last year, making it slightly bigger than Sweden's Ericsson and China's Huawei, which lead the telecoms equipment industry.

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The Finnish group also announced that its Here mapping business was potentially up for sale, saying: "The board of directors of Nokia believes this is the right moment to assess the position of Here within the proposed new Nokia business".

The two transactions would crown Nokia's turnround from a struggling mobile phone maker - a business it sold in 2013 to Microsoft - to one of three companies dominating a heavily consolidated telecoms equipment industry.

"Together, Alcatel-Lucent and Nokia intend to lead in next-generation network technology and services," said Rajeev Suri, Nokia's chief executive. "Our innovation capability will be extraordinary, bringing together the R&D engine of Nokia with that of Alcatel-Lucent and its iconic Bell Labs."

Michel Combes, Alcatel's chief executive, added: "This transaction comes at the right time to strengthen the European technology industry . . . [It] represents a compelling offer for our shareholders both in terms of upfront premium and long-term value creation potential."

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