Nokia acquires Alcatel-Lucent for $16.6bn


Financier Worldwide Magazine

June 2015 Issue

June 2015 Issue

In a $16.6bn deal, Finnish multinational communications and information technology company Nokia and leading IP networking, ultra-broadband access and cloud applications specialist Alcatel-Lucent have agreed to combine forces “to lead in next-generation network technology and services.”

The two companies have entered into a memorandum of understanding under which Nokia will make an offer for all of the equity securities issued by Alcatel-Lucent through a public exchange offer in France and in the United States, on the basis of 0.55 of a new Nokia share for every Alcatel-Lucent share.

The all-share transaction values Alcatel-Lucent at €15.6bn on a fully diluted basis, corresponding to a fully diluted premium of 34 percent, and a premium to shareholders of 28 percent, on the unaffected weighted average share price of Alcatel-Lucent for the previous three months. This is based on Nokia’s unaffected closing share price of €7.77 on 13 April 2015.

The planned combined company will be called Nokia Corporation and be headquartered in Finland, with strategic business locations and major R&D centres in France, and many other countries including Germany, the US and China. It is planned that current Nokia chairman Risto Siilasmaa will continue in his role and Rajeev Suri will be chief executive. The company’s board of directors is planned to have nine or 10 members, including three members from Alcatel-Lucent, one of whom would serve as vice chairman.

“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,” said Rajeev Suri, president and chief executive of Nokia. “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. 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.”

Nokia and Alcatel-Lucent have highly complementary portfolios and geographies, with particular strength in the US, China, Europe and Asia-Pacific.

“A combination of Nokia and Alcatel-Lucent will offer a unique opportunity to create a European champion and global leader in ultra-broadband, IP networking and cloud applications”, said Michel Combes, chief executive of Alcatel-Lucent. “I am proud that the joined forces of Nokia and Alcatel-Lucent are ready to accelerate our strategic vision, giving us the financial strength to achieve our transformation and invest in and develop the next generation of network technology.

“The proposed transaction represents a compelling offer for our shareholders, both in terms of upfront premium and long term value creation potential. Shareholders of Alcatel-Lucent now have the opportunity to participate in the future upside of the industrial project that they have supported during the last two years, through a stronger combined business with greater global scale and a better position for the longer term.”

J.P. Morgan served as financial adviser to Nokia and Skadden, Arps, Slate, Meagher & Flom LLP and Roschier, Attorneys Ltd served as legal advisers. Zaoui & Co acted as lead M&A adviser to Alcatel-Lucent and Sullivan & Cromwell LLP served as legal adviser.

Each company’s board of directors has approved the terms of the proposed transaction, subject to approval by Nokia’s shareholders, completion of relevant works council consultations, receipt of regulatory approvals and other customary conditions, which is expected to close in the first half of 2016.

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Fraser Tennant

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