European vendors Nokia and Alcatel-Lucent are in advanced discussions “with respect to a potential full combination”, the companies said in a joint statement this morning.
The disclosure was provoked by a report in French daily Les Echos, which…
European vendors Nokia and Alcatel-Lucent are in advanced discussions “with respect to a potential full combination”, the companies said in a joint statement this morning.
The disclosure was provoked by a report in French daily Les Echos, which suggested Nokia would buy Alcatel-Lucent’s wireless networks business as opposed to the full merger talks now confirmed.
A tie-up would take the form of a public exchange offer by Nokia for Alcatel-Lucent, although there is no guarantee that a transaction will materialise. The companies said a further announcement would follow when appropriate.
Alcatel-Lucent’s shares are up roughly 12% on yesterday, while Nokia’s are down by around 6%.
A combination between Finnish Nokia and Paris-based Alcatel-Lucent has been mooted for some time, with both companies facing pressures from larger rivals. A merger of the two would create a network equipment company to rival market leaders Ericsson and Huawei. Nokia and Alcatel-Lucent have market capitalisations of US$28.2bn and US$12.9bn respectively, which combined is still less than Ericsson’s US$42.6bn.
For Nokia, taking over Alcatel-Lucent would be the continuation of the company’s transformation. It was once the world’s largest producer of handsets but, after selling that part of its business to Microsoft last year and buying Siemens out of NSN in 2013, it has been shaping itself into a networks-focused company.
Meanwhile Alcatel-Lucent has itself been renovating its business.
The French vendor is past the halfway point in its three-year ‘shift plan’ to restructure, refinance and reposition the company. In an interview with TelecomFinance in late 2014, Combes said his firm is now ready to “fight to win” in the marketplace.
