Nokia Confirms ‘Advanced Discussions’ On Merging With Alcatel

Nokia confirms that it is in serious talks with its networking rival Alcatel-Lucent. If the French government approves it, the Finnish tech company may acquire the French global telecommunications equipment company.

Both companies have confirmed on Tuesday that company officials are in “advanced talks” about the probable acquisition. If Nokia acquires the company, headquartered in Boulogne-Billancourt, France; it will take over the French company’s core networking, wireless and fixed-line access equipment businesses.

The full acquisition of the French company will bulk up Nokia’s networks business. Both companies released an identical statement which confirmed that acquisition talks.

"Nokia and Alcatel-Lucent confirm that they are in advanced discussions with respect to a potential full combination, which would take the form of a public exchange offer by Nokia for Alcatel-Lucent," the statement said. However, neither of the companies is willing to claim any certainty at this stage that these discussions will result in any agreement or transaction."

The deal, if it takes place, will be a remarkable achievement for Nokia. The Finnish company was in critical financial difficulties only a couple of years ago. The company sold its mobile phone division to Microsoft despite the fact that Nokia mobiles had once ruled the global mobile market.

Nokia hit a record low in its shares in 2012. While investors were concerned that the company might be short of cash, the company recovered as its share price quadrupled since then.

Alcatel's wireless unit, on the other hand, is the second biggest in the company. It accounts for €4.7bn while its revenue for the complete year is €7.16bn. Alcatel earned €6bn by selling IP router equipment in 2014.

Both companies saw a jump in its stock in December 2014 after there had been rumours about a possible buyout. If Nokia and Alcatel were together in 2014, it would have earned revenues of €26bn. The amount is about the same as Ericsson’s €24.4bn.

Meanwhile, some experts have expressed their concerns over probable integration issues. Both the companies were formed through cross-border mergers and needed substantial restructuring in recent times.

Contact the writer: s.mukhopadhyay@ibtimes.com.au