Nokia will buy its rival Alcatel-Lucent SA in an all-stock deal valued at 15.6 billion euros ($16.6 billion) to launch the world’s largest supplier of equipment that powers mobile-phone networks. Alcatel investors will have 0.55 Nokia shares for each stock they own - the price is equivalent to about 4.12 euros based on Nokia’s closing price yesterday.
Alcatel shares rose 16 percent to 4.48 euros in Paris on Tuesday after the company confirmed it’s in advanced talks to merge with Nokia. Nokia closed 3.6 percent lower at 7.49 euros on the Helsinki exchange.
According to researcher IDC, Nokia’s biggest-ever acquisition would result in a company that
surpasses Ericsson AB and Huawei Technologies Co. in
wireless-infrastructure revenue.
Chief Executive Officer Rajeev Suri would now be allowed to strengthen Nokia’s
position in China, a market of 1.3 billion mobile subscribers, and take
on contracts with the two biggest U.S. carriers - Verizon
Communications Inc. and AT&T Inc.
Nokia will now be able to add products used to transmit landline and Internet traffic, giving it a more complete offering to sell to carriers as the amount of data traveling on networks increases with the popularity of Netflix and other video and music services.
In total, Nokia and Alcatel have more than 110,000 workers together. Suri, who took over as head of Nokia’s networks unit in 2009 and became group CEO in 2014, has revived the equipment business by cutting more than 25,000 jobs over three years and focusing on more lucrative contracts.
