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Nokia shareholders this week endorsed the company’s $16.6 billion proposal to buy Alcatel-Lucent in a bid to create a major competitor to such networking vendors as Ericsson, Huawei Technologies and Cisco Systems.
During a meeting in Helsinki Dec. 2, Nokia investors overwhelmingly supported the deal, according to company officials. The acquisition has received the necessary approvals from regulatory agencies around the world—including in the United States, the European Union and China—and now needs the majority of Alcatel-Lucent shareholders to agree. The companies are aiming to close the deal in the first quarter of 2016.
“We are delighted that the vast majority of Nokia’s shareholders recognize the long-term value creation opportunity that this proposed combination represents,” Nokia President and CEO Rajeev Suri said in a statement. “We now encourage Alcatel-Lucent shareholders and convertible bondholders to help realize this potential by tendering their securities into the public exchange offer. By doing so, they would play an important role in helping to create a new leader in next-generation technology and services for an IP-connected world.”
The companies announced the deal earlier this year after two years of speculation, bringing together two networking vendors that have been in transition after Nokia ended its partnership with Siemens and Alcatel-Lucent went 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. The deal is expected to double Nokia’s workforce to almost 110,000, and will bring greater expertise in such areas as mobile networking, cloud computing and R&D (through Alcatel-Lucent’s Bell Labs).
Officials with the companies hope the combined entity will better compete with Ericsson and Huawei, which has a growing presence in Europe, and will gain more traction in the attractive Chinese market. Last month, Cisco and Ericsson announced an alliance in which they would work together in developing networking technologies for such areas as the Internet of things (IoT), software-defined networking (SDN) and network-functions virtualization (NFV). Both said the partnership cold mean as much as $1 billion to each company by 2018.
Nokia’s shareholder vote came the same week that the company announced it had completed the sale of its HERE digital mapping and location services business to a consortium of German auto makers that includes Audi, BMW and Daimler.