Nokia announced that it reached an agreement to buy Alcatel-Lucent for 15.6 billion Euros (about $16.6 billion) in a share exchange. In the end Alcatel-Lucent’s shareholders will own 33.5% of the combined share capital while Nokia’s shareholders will own the remaining 66.5%. The company involved is the “true” Nokia, not the Devices & Services unit sold to Microsoft in 2013.
Rajeev Suri, appointed Nokia President and CEO almost a year ago, stated that together Alcatel-Lucent and Nokia intend to lead the next generation of network technology and services. This is the field the company decided to focus its efforts on after the sale of the division that dealt with mobile devices.
Both companies made major restructuring in recent years by selling whole business units. Together, they’ll provide a wide range of networking products and services on both mobile and fixed networks. According to Michel Combes, Alcatel-Lucent’s CEO, the new company will offer a unique opportunity to create a European champion in these fields.
In the end, these are two companies that passed through difficult years and, following the trend that’s become established, decided to focus on certain specific activities selling some other ones. Concerning that, Nokia also issued a press release announcing a review of strategic options regarding HERE, Nokia’s business unit in charge of the maps. In short, there’s another possible sale coming.
Certainly, the merger between Nokia and Alcatel-Lucent will optimize cost management. However, the main purpose of this operation is to create a giant that can compete with big companies such as Ericsson, Huawei and ZTE. In the US market, it could have an advantage on Chinese companies, often in under intelligence’s scrutiny on charges of spying for the Chinese government.
The doubt in this operation, however, came from the French government, which could oppose for fear of massive layoffs of Alcatel-Lucent’s personnel. Last Tuesday, the two companies’ CEOs met French President Holland. There are no official comment on the meeting but apparently it was good because the agreement was announced with a lot of optimism about the future in the new company.
