Corporate Finance

Nokia bought Alcatel-Lucent for $16.6 billion

French President François Hollande met Nokia’s CEO on Tuesday

French President François Hollande met Nokia’s CEO on Tuesday

Nokia agreed to buy Alcatel-Lucent SA for 15.6 billion euros ($16.6 billion). This deal will create the largest maker of telecom equipment.

This full merger between Nokia and Alcatel-Lucent will create a company generating nearly $27 billion in annual revenues. In wireless, the combined group would have 27.2% of the market share, while 25.7% remained in the hands of Sweden’s Ericsson and 23.2% for China’s Huawei, according to Bernstein Research.

Alcatel-Lucent shares fell 9% while Nokia shares rose 2.8% after the news.

In spite that neither the Finnish or French companies are the industry’s best players, this merger would be a good fit in terms of products and geographies. Production costs would be remarkably lowered due to bulking up of infrastructure.

On the more pragmatic side the French government appeared wary of the potential aftermath of this merger, warning earlier this week that it would be watchful of the consequences on jobs and the telecom sector in France. On Tuesday afternoon, President François Hollande met Rajeev Suri, CEO and president of Nokia to discuss the potential impact of this union on French employees.

Nokia has almost 62,000 employees worldwide while Alcatel-Lucent has about 6,000 employees in France and 52,000 employees worldwide.



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