Nokia has announced that it is planning to buy French rival Alcatel-Lucent in a deal worth €15.6billion. Under the terms of the deal Alcatel-Lucent shareholders will own 33.5% of the new combined firm, and Nokia shareholders 66.5%. The takeover is expected to be completed by the end of the first half of next year.
Alcatel-Lucent has been struggling and has undergone repeated rounds of restructuring since the 2006 merger of France's Alcatel and US-based Lucent Technologies. It is currently laying off more than 10,000 workers and made a net loss of €118million last year.
Currently both companies are the weakest players in the telecoms equipment market and the merger will form a European telecoms equipment group worth more than €40bn (£29bn) and a market share of over 35 per cent, second to Ericsson which currently has a 40 per cent share.
Nokia's chief executive, Rajeev Suri, said the firms' complementary technologies would give them "the scale to lead in every area in which we choose to compete" and both firms expect to make savings in terms of operating costs of nearly €900m by 2019. Nokia also added that it would not cut jobs beyond what Alcatel had already planned.
Reaction to the news has been mixed with worries that Nokia is taking a significant risk with the acquisition. Analyst Mikael Rautanen from Inderes Equity Research warned that the merger could become, "a long and rocky road and investors could lose their patience following through the integration programme that will take years,"
Author
Neil Tyler
Source: www.newelectronics.co.uk