It’s the buzz of the tech world, Finnish giant Nokia has finally acquired rival Alcatel-Lucent in an all-stock deal that’s valued at $16.6 billion. The deal between Finnish telecommunication equipment maker Nokia and its France-based rival is expected to be close in the first half of 2016.
Words and rumors about Nokia possibly acquiring Alcatel-Lucent began two years ago, after Nokia Acquired Siemens’ half of the companies’ joint venture and had agreed to sell its struggling hardware business to Redmond-based Microsoft Corporation. The announcement of the deal comes less than 24 hours after officials with both companies said they were in advanced talks, though they had cautioned that an agreement wasn’t certain.
The deal provides incredible scale, vast expertise, and a proven ability to execute, their combined strengths will create opportunities beyond anything that currently exists. It’s all about brute scale and huge numbers, the marriage of the two mega companies will create a huge company that in 2014 had a combined $27.5 billion in sales and $2.45 billion in profit, more than $5 billion in R&D (this include funding for Bell Labs and Nokia’s FutureWorks) and net cash of about $7.9 billion.
The merger will create a new company, with a combined market value of about $40 billion. The new company will be called Nokia Corporation and will be based in Finland. It will create a significant player in a rapidly evolving networking market, it will be broad enough to deal with such fast-moving trends as mobile computing, cloud computing, IoT, and software-defined networking. And strong enough to challenge market leader Ericsson and meet growing threats from Asia.
Alcatel-Lucent CEO Michel Combes said in a statement: “This transaction comes at the right time to strengthen the European technology industry. 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 United States and China.”
Nokia president and CEO Rajeev Suri said in a statement: “we will have a strong presence in every part of the world, including leading positions in the United States 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.”
Despite concerns about antitrust concerns and government regulations, the deal already has the support of the French government.
Once completed, the company will take on the Nokia name, Nokia chairman Ristoo Siilasmaa and CEO Rajeev Suri will hold on to those roles, while employees from Alcatel-Lucent will serve on the new company’s board, including the role of vice chairman.
While the two companies certainly have some work to do, they’re apparently confident that together they can stand up against rivals Ericsson, Huawei, and Cisco.
Alcatel-Lucent is a French global telecommunication equipment company, based in Boulogne-Billancourt, France. The company focuses on fixed mobile, and converged networking hardware, IP technologies, software, and services. The company owns Bell Laboratories, one of the largest research and development facilities in the communication industry.