Nokia and Alcatel-Lucent are joining forces in an attempt to create a new global leader in the fast-evolving communications equipment sector, which is still trying to come to terms with the Internet and the rise of IP-based networks. The Finnish company Nokia has announced that it is buying the French Alcatel-Lucent in an all-share transaction that values Alcatel-Lucent at €15.6 billion (around $16.6 billion), a premium on its current market value of $11.6 billion. Nokia has a capitalization of $30.4 billion. The proposed transaction is expected to close in the first half of 2016 and is subject to approval by regulatory bodies and shareholders. The combined company will be called Nokia Corporation, with headquarters in Finland.
Explaining the fusion, Nokia said in its press release: “Alcatel-Lucent and Nokia have highly complementary portfolios and geographies, with particular strength in the United States, China, Europe and Asia-Pacific. They will also bring together the best of fixed and mobile broadband, IP routing, core networks, cloud applications and services.” A salient feature of both companies is their failure to establish themselves in the key smartphone sector, largely through an inability to respond fast enough to the rise of Apple and Android.
It’s probably too late for even the newly enlarged Nokia to regain significant share in this market, bearing in mind Microsoft’s repeated failure to do so, notably after it acquired Nokia’s mobile phone division in 2013. Instead, the merged operation is likely to seek to establish itself as a major player in the telecommunications and networking infrastructure sector.
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