Nokia to acquire Alcatel-Lucent

Nokia and Alcatel-Lucent are combining to create technology and services for an IP-connected world. Nokia will acquire Alcatel Lucent for about 15.6 billion Euros in a proposed transaction that is expected to close in the first half of 2016. It is expected that the remainder of 2015 will constitute a review period consisting of regulatory and merger control review in a number of jurisdictions, a review by the French Financial Markets Authority (Autorité des Marchés Financiers or AMF) and other transaction approvals and reviews.
The combined company will be called Nokia Corporation, with headquarters in Finland and strategic business locations and major R&D centres in France, plus in many other countries including Germany, the US and China. The business is expected to operate under the Nokia brand and intends to retain the Bell Labs brand to host its networks-focused innovation activities. Risto Siilasmaa is planned to serve as Chairman, and Rajeev Suri as Chief Executive Officer.

Alcatel-Lucent and Nokia have complementary portfolios and geographies, with particular strength in the US, China, Europe and Asia Pacific. As a result of the transaction Nokia will own Alcatel-Lucent's 50% plus one share holding in Alcatel-Lucent Shanghai Bell, a company limited by shares supervised by the State-owned Assets Supervision and Administration Commission of China. Both companies support the Chinese government's ambitions to encourage a climate for indigenous innovation and technology development through the 'Internet Plus' and 'Made in China 2025' initiatives. The combined company intends to remain committed to China and plans to continue enabling local innovation with fast, smart, secure and reliable networks built with its Chinese partners.

The new company will bring together the best of fixed and mobile broadband, IP routing, core networks, cloud applications and services. This combination is expected to create access to an expanded addressable market with improved long term growth opportunities. The new company will also have strong innovation capabilities with Alcatel-Lucent's Bell Labs and Nokia's FutureWorks. It is expected to focus on emerging technologies like 5G, IP and software-defined networking, cloud, analytics as well as sensors and imaging. Nokia Technologies will remain a separate entity with a clear focus on licensing and the incubation of new technologies. 

Rajeev Suri, President and Chief Executive Officer of Nokia, said: "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.

"We have hugely complementary technologies and the comprehensive portfolio necessary to enable the Internet of Things and transition to the cloud.  We will have a strong presence in every part of the world, including leading positions in the US and China.

"Together, we expect to have the scale to lead in every area in which we choose to compete, drive profitable growth, meet the needs of global customers, develop new technologies, build on our successful intellectual property licensing, and create value for our shareholders.

"For all these reasons, I firmly believe that this is the right deal, with the right logic, at the right time."

Michel Combes, Chief Executive Officer of Alcatel-Lucent, added: "We believe our customers will benefit from our improved innovation capability and incomparable R&D engine under the Bell Labs brand. The global scale and footprint of the new company will reinforce its presence in the US and China." 

The combined company will be positioned to target a larger addressable market with an improved growth profile. Based on Nokia estimates, the addressable market of the combined company in 2014 was approximately 50% larger than the current addressable networks market for Nokia alone, increasing from approximately 84 billion Euros to approximately 130 billion Euros. The combined company is expected to have a stronger growth profile than Nokia's current addressable market, with an estimated CAGR of approximately 3.5% for 2014 to 2019.