FRIDAY 17 APR 2015 9:35 AM


Nokia will acquire French telecommunications equipment company Alcatel-Lucent. The combined firm’s market share will enable it to compete with the telecoms equipment industry leaders, Ericsson. Nokia has changed its business focus since selling its mobile phone handset business to Microsoft last year.

Nokia CEO, Rajeev Suri, reassures investors, "This is not a joint venture, so there will be no governance issues. We will take a no politics, no nonsense approach to running the business, and have learned from past mistakes."

However, Juha Varis, a fund manager at Danske Capital, told Reuters that he believed Nokia’s agreement to not cut staff in France; terms laid down by the French state, could have a negative impact on company culture. Varis says, "The integration will be a difficult task, it will easily take a year or two, and the management group must focus on it heavily. For an investor seeking returns this year, it is clear that Nokia looks less interesting after this move."

Despite this, Nokia’s shares rose 5% in early trading, perhaps a reflection that investors are happy with the price Nokia secured.

Under the all-share deal, Alcatel-Lucent shareholders will own 33.5% of the new combined firm, and Nokia shareholders 66.5%, Nokia bought Alcatel-Lucent for $16.6bn. The two companies expect the deal to close in the first half of 2016, the combined company will be called Nokia Corporation and will be headquartered in Finland. 


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