Nokia has today announced that it has agreed to buy Telecom major Alcatel Lucent, in a dela valued to the north of $16.5 Billion. This comes in less than 24 hours since Nokia confirmed that it was discussing the deal.
Nokia is paying $16.6 Billion for the acquisition, which is expected to close in the first half next year.
In a stock exchange statement issued today, Nokia said,
The combined company will be uniquely positioned to create the foundation of seamless connectivity for people and things wherever they are. This foundation is essential for enabling the next wave of technological change, including the Internet of Things and transition to the cloud.
Interesting however, is Nokia’s mention of “transition to cloud”.
The combined company will quite rightly be one of the most sought after epicentres of innovation, with Alcatel-Lucent’s Bell Labs and Nokia’s FutureWorks, as well as Nokia Technologies, which will stay as a separate entity with a clear focus on licensing and the incubation of new technologies. The two companies combined now have more than 40 000 R&D employees and spend of EUR 4.7 billion in R&D, as of 2014.
Rajeev Suri, President and Chief Executive Officer of Nokia, said:
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.
We have hugely complementary technologies and the comprehensive portfolio necessary to enable the internet of things and transition to the cloud. We will have a strong presence in every part of the world, including leading positions in the United States and China.
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 EUR 15.6 billion on a fully diluted basis, corresponding to a fully diluted premium of 34% (equivalent to EUR 4.48 per share), and a premium to shareholders of 28% (equivalent to EUR 4.27 per share).
Each company’s Board of Directors has approved the terms of the proposed transaction, which is expected to close in the first half of 2016.