The merged entity will create a European telecoms equipment group worth over €40 billion which will better compete with Ericsson and Huawei. It will also bolster Nokia’s position in China and gain key contracts with AT&T and Verizon in the North American market.
In addition, the Finnish company will give Alcatel-Lucent shareholders 0.55 shares for each stock they own.
The deal will be finalised in the first half of 2016 and is expected to expand its total addressable market by 50% to €130 billion. The takeover will also raise its potential market growth to 3.5% per year during 2014-2019, resulting in €900 million of operating cost savings by the end of 2019, the companies said in a joint statement.
Risto Siilasmaa, Nokia’s chairman, and its CEO, Rajeev Suri, will lead the merged group and the company will remain headquartered in Finland with a strong presence in France. Alcatel-Lucent will have three members – including the vice chairman – on the board of nine to 10 members.
Nokia said it intends to be an “important contributor” of the overall development of the technology industry in France. Upon completion of the transaction, it aims to establish a €100 million fund to invest in start-ups in the country with a focus on the Internet of Things.
Nokia has also confirmed that it is exploring a sale of its HERE maps unit. Bids for the unit – valued by Nokia at €2 billion – are expected soon.
