Nokia in Talks to Acquire Alcatel-Lucent

Nokia Oyj has been in talks to acquire Alcatel-Lucent, possibly combining the two weakest players in their industry. Jointly announced, Nokia Oyj and Alcatel-Lucent stated that they are currently in “advanced discussions” on a “full combination” which would result in a public exchange offer. Their possible acquisition has been in discussion for the past few years and the two companies warn that the discussions could still possibly fall apart. The companies’ products and locations make them a good fit for each other and an acquisition between the two would assist in cutting costs as they compete with Sweden’s Ericsson and China’s Huawei.

Nokia would be able to expand their presence into the major United States market in which Alcatel-Lucent already exists as a primary supplier for AT&T and Verizon. The French government has a foot in this deal as it typically intervenes in major acquisition deals to maintain a French foothold in strategic industries along with keeping close attention to job cuts. Although the deal is backed by the French government, there could still be possibilities in challenges of cutting costs. History of acquisitions in the industry show historic difficulties in reducing costs in a business that cannot easily drop products and require extensive research and development. The last merger that occurred about a decade ago included Alcatel-Lucent and Nokia with Siemens in which both companies saw a loss in value and market share. Nokia Oyj is a Finnish communications and information technology company that serves the multinational market. Headquartered in Espoo, Uusimaa, the company has over 61,000 employees and has met over $12 billion euros in yearly revenue. Alcatel-Lucent is a French telecommunications equipment company that also provides their products and services to the global market. The company focuses primarily on fixed, mobile, and converged networking hardware, IP technologies, software, and services.

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