Nokia And Alcatel-Lucent Agree Takeover, Subject To Approval

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The ink is barely drying on our recent article covering how Nokia and Alcatel-Lucent were in discussions for a possible takeover of Alcatel-Lucent by Nokia, combining two of the weaker global cellular equipment makers. We’ve not seen Nokia announce plans to buy Alcatel-Lucent for 15.6 billion Euros, approximately $16.5 billion, in an all-stock deal. The detail of the deal is that Alcatel-Lucent shareholders will receive 0.55 Nokia shares and following the deal, Nokia will own approximately two thirds of the combined business and Alcatel-Lucent shareholders the remaining third. The new business will continue with the Nokia branding and be headquartered in Finland, with key offices in France, Germany, the United States of America and China.

The story goes on to highlight that the deal has been approved by both companies boards but of course it still has to go through regulatory and political approval. Nokia writes that they are confident the deal will be concluded by the first half of 2016. The statement released is at pains to emphasise the importance of the French office in the new combined business, which is important given how France is very protective of the telecommunications industry and has the power to block foreign takeovers. The statement reads: “Nokia is a global company, with deep roots and heritage in many parts of the world. When it joins with Alcatel-Lucent, it also expects that France, where Alcatel-Lucent is a fundamental participant in the technology ecosystem, will be a vibrant center of the combined company.” The French connection will be underpinned by a 100 million Euro investment fund focused on French startups associated with the Internet of Things (IoT) and industrial Internet area, plus a 5G and small cell research centre.

At the same time, Nokia also confirmed that it is considering a potential sale of the Here mapping unit, which one of just three business units remaining after selling the mobile ‘phone business to Microsoft along with the networking division and Nokia Technologies, which serves as the patent holding and invention arm. Nokia Technologies will not be affected by the proposed purchase of Alcatel-Lucent. Nokia’s statement about Here simply states: “That review is ongoing, it may or may not lead to a transaction, and any further announcements about Here will be made in due course, as appropriate.”

If the Nokia / Alcatel-Lucent deal goes through, and if Nokia sells the Here mapping division, it will mean in three years that the business has completely reinvented itself, having sold on the mobile ‘phone business to Microsoft. Going forwards, we’ve seen that Nokia Technologies is keeping an involvement in smartphone design (witness a new generation Nokia 1100 model) and it will be interesting to see where the business goes from here.