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Nokia, Alcatel-Lucent Deal Gets Blessing From China

Antitrust regulators in the country gave their approval to the $16.6 billion merger, removing the largest remaining obstacle to the proposal.

IT business

Nokia cleared the last regulatory hurdle to its $16.6 billion acquisition of Alcatel-Lucent when Chinese antitrust regulators gave their approval to the deal.

Nokia officials announced Oct. 19 that the acquisition, which will create a formidable networking company that will be able to better compete with such vendors as Ericsson, Cisco Systems and Huawei Technologies, has received the official approval of the Chinese Ministry of Commerce. In addition, they said that while there are still other approvals being sought—such as from the government in France, home of Alcatel-Lucent's headquarters—the OK from China was crucial.

"Completion of the material antitrust reviews is another significant milestone in the transaction, as we ready ourselves for operating as a combined company," Nokia President and CEO Rajeev Suri said in a statement.

Suri will be CEO of the combined company after the deal closes, which is expected to happen in the first half of next year.

The deal, which was announced earlier this year after two years of speculation, brings together two networking vendors that have been in transition, with Nokia ending its partnership with Siemens and Alcatel-Lucent going through multiple restructuring efforts, with the latest one called The Shift Plan. Officials with both vendors have noted that in 2014, the companies together generated $27.5 billion in sales and $2.45 billion in profits, spent more than $5 billion in R&D and had net cash of almost $7.9 billion.

Regulators in the United States and European Union have already cleared the deal. In hopes of winning favor in China, Nokia officials in August entered into a joint venture with Chinese investment firm China Huaxin to create a company that will be called Nokia Shanghai Bell and will join Nokia's telecommunications infrastructure business in China with Alcatel-Lucent Shanghai Bell, an existing joint venture between Alcatel-Lucent and China Huaxin. Nokia will hold a 50 percent-plus-one share of Nokia Shanghai Bell.

The new company will give Nokia a strong presence in the attractive Chinese telecommunications market, according to Nokia officials. At the time the joint venture was announced, Suri said in a statement that with the plans for Nokia Shanghai Bell in place, "we will also work closely with our new partners to make the case for swift approval of the proposed combination between Nokia and Alcatel-Lucent by the appropriate Chinese authorities."