Nokia to acquire Alca-Lu for EUR16.5bn

15 Apr 2015

Just 24 hours after Finland’s Nokia Networks confirmed that it was in advanced discussions to acquire French-US rival Alcatel-Lucent, the pair have announced a deal. With the two companies saying they plan to combine in order to ‘create an innovation leader in next generation technology and services for an IP connected world’, they have entered into a memorandum of understanding (MoU) under which Nokia will make an offer for all of the equity securities issued by Alca-Lu, through a public exchange offer in France and in the US, on the basis of 0.55 of a new Nokia share for every Alca-Lu share. This all-share transaction values the French-US vendor at EUR15.6 billion (USD16.5 billion) on a fully diluted basis, and each company’s board of directors has reportedly already approved the terms of the proposed transaction, which is expected to close in the first half of 2016. However, the deal remains subject to approval by Nokia’s shareholders, as well as the ‘completion of relevant works council consultations, receipt of regulatory approvals and other customary conditions’.

Should the deal be completed, Alca-Lu shareholders will own 33.5% of the fully diluted share capital of the combined company, with Nokia shareholders accounting for the remaining 66.5%, assuming full acceptance of the public exchange offer. It has also been confirmed that the combined company will be called Nokia Corporation, with headquarters in Finland, while retaining a strong presence in France. Meanwhile, the merged entity will target approximately EUR900 million of operating cost synergies to be achieved on a full year basis in 2019, as well as around EUR200 million of reductions in interest expenses to be achieved on a full year basis in 2017.

Commenting on the development, Rajeev Suri, president and CEO at Nokia, was cited as saying: ‘Together, Alcatel-Lucent and Nokia intend to lead in next-generation network technology and services, with the scope to create seamless connectivity for people and things wherever they are. Our innovation capability will be extraordinary, bringing together the R&D engine of Nokia with that of Alcatel-Lucent and its iconic Bell Labs. We will continue to combine this strength with the highly efficient, lean operations needed to compete on a global scale.’ Meanwhile, Alca-Lu chief executive Michel Combes noted: ‘A combination of Nokia and Alcatel-Lucent will offer a unique opportunity to create a European champion and global leader in ultra-broadband, IP networking and cloud applications. I am proud that the joined forces of Nokia and Alcatel-Lucent are ready to accelerate our strategic vision, giving us the financial strength and critical scale needed to achieve our transformation and invest in and develop the next generation of network technology.’

Finland, France,Alcatel-Lucent, Nokia Networks (formerly NSN),

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