Nokia Oyj is in advanced talks to acquire Alcatel-Lucent SA in the Finnish telecommunications-equipment maker’s biggest-ever acquisition that could value the French rival at more than US$13 billion.
The combination would be in a public exchange offer by Espoo, Finland-based Nokia for Paris-based Alcatel, the companies said in statements yesterday.
Alcatel shares jumped as much as 18 percent in the French capital, while Nokia shares fell as much as 8.3 percent on the Helsinki exchange.
Photo: Bloomberg
The companies make networking equipment, such as base stations and antennas that transmit mobile phone calls and data, competing against Sweden’s Ericsson AB and Huawei Technologies Co (華為) of China.
By acquiring Alcatel, Nokia chief executive officer Rajeev Suri would bolster the Finnish supplier’s position in China, a market with about 1.3 billion wireless subscribers, and take on some contracts with the two biggest US carriers — Verizon Communications Inc and AT&T Inc.
No agreement has been reached and a deal could still fall apart, the companies said.
Nokia executives are seeking to secure French state backing for a deal, a person familiar with the matter said. Any deal would need a green light from French President Francois Hollande’s government, which has previously tried to block corporate mergers in the country.
French government officials are working with advisers on a transaction that would protect some domestic research jobs, people familiar with the matter said. A French government official declined to comment.
Nokia shares had lost 6.7 percent to 7.25 euros at 10:07am yesterday in Helsinki, after dropping as low as 7.13 euros. Alcatel climbed 13 percent to 4.38 euros in Paris yesterday, after rising as high as 4.57 euros.
Exane BNP Paribas analyst Alexander Peterc said Alcatel could be worth 4.50 euros per share in a sale, which would value the company’s equity at 12.7 billion euros (US$13.4 billion).
A planned disposal of Nokia’s maps business, HERE, has led analysts to speculate that the proceeds could be used to help pay for acquisitions. Bloomberg News reported on Friday last week that Nokia is exploring a sale of HERE.
Consolidation has dominated conversations in the network equipment industry for at least the past five years, as price wars dragged profits down and carriers reduce spending on infrastructure amid sluggish revenue. Suri and Alcatel CEO Michel Combes have eliminated jobs and focused on more profitable contracts.
Talks between Nokia and Alcatel have been on and off in the past.
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