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    Nokia Assumes Control of Alcatel-Lucent

    By
    Jeff Burt
    -
    January 4, 2016
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      Nokia Alcatel-Lucent

      Nokia has taken control of one-time rival Alcatel-Lucent and will begin offering a merged product portfolio late next week as the company looks to build a larger entity that can better challenge Ericsson, Huawei Technologies and Cisco Systems in the increasingly competitive market for telecommunications networking equipment.

      Nokia officials on Jan. 4 announced that the French stock market authority had found that, following the interim results of the initial offer period of Nokia’s public exchange offer for Alcatel-Lucent stock in France and the United States, Nokia controls almost 79 percent of Alcatel-Lucent shares. In a statement, they said it is in the best interest of the remaining Alcatel-Lucent investors to sell their shares to Nokia and that if Nokia acquires 95 percent of Alcatel-Lucent, it would “squeeze out the remaining shares.”

      The finding enables Nokia to begin merging the two companies, and officials said they will start offering a single lineup of products this month.

      “We will move quickly to combine the two companies and execute our integration plans,” Nokia President and CEO Rajeev Suri said in a statement. “As of January 14, 2016, Nokia and Alcatel-Lucent will offer a combined end-to-end portfolio of the scope and scale to meet the needs of our global customers. We will have unparalleled R&D and innovation capabilities, which we will use to lead the world in creating next-generation technology and services.”

      The announcement comes a month after Nokia shareholders endorsed the company’s $16.6 billion bid for Alcatel-Lucent, which was announced in April 2015 after almost two years of speculation. Both Nokia and Alcatel-Lucent were finding it increasingly difficult to compete with Ericsson and Huawei, and officials said they expected a combined company would be in a better position to challenge the larger rivals in Europe and gain greater leverage in the growing Chinese market.

      Competitors in the space are not standing still while Nokia and Alcatel-Lucent merge. In November, Cisco and Ericsson announced an alliance in which they will work together to develop networking technologies aimed at 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.

      The deal also was announced after Nokia ended its networking partnership with Siemens and as Alcatel-Lucent was making it through the latest restructuring effort, which had been called the Shift Plan. At the time the Nokia-Alcatel-Lucent deal was announced, officials with both vendors noted that, combined, the two companies in 2014 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 to Nokia in such areas as mobile networking, cloud computing and R&D (through Alcatel-Lucent’s Bell Labs).

      After the deal closes, Nokia also intends to delist Alcatel-Lucent from the New York Stock Exchange, and will kick off a $7.58 billion program to optimize its capital structure and return about $4.33 billion to Nokia shareholders. There are no plans to return any money to Alcatel-Lucent shareholders.

      Jeff Burt
      Jeffrey Burt has been with eWEEK since 2000, covering an array of areas that includes servers, networking, PCs, processors, converged infrastructure, unified communications and the Internet of things.

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