Nokia Networks, a division of Nokia Corp.NOK recently received the support of the broad of directors of Alcatel-LucentALU for its proposed acquisition of the latter. In Apr 2015, Nokia Networks had entered into a definitive agreement with Alcatel-Lucent for its full acquisition for a total consideration of Euro 15.6 billion (approximately $16.6 billion).
The deal is expected to close by mid-2016 subject to approval by both the company's shareholders and the regulatory authorities. Notably, Nokia shareholders will command a 66.5% stake in the merged entity while Alcatel-Lucent shareholders will hold the remaining 33.5%.
Several analysts have estimated that the combined Nokia and Alcatel-Lucent will command about 35% of the global wireless infrastructure market share, much closer to Ericsson AB's ERIC estimated 40% hold and far ahead of Huawei Technologies Co. Ltd.'s 20% share.
Acquisition of the wireless business of Alcatel-Lucent will significantly strengthen Nokia Networks' foothold in North America. Top U.S. telecom operators, namely, Verizon Communications Inc. VZ and AT&T Inc. T are major customers of Alcatel-Lucent.
Notably, in 2014, the wireless division of Alcatel-Lucent generated around $5 billion in sales. Out of the total, Verizon and AT&T jointly contributed more than 25%. Additionally, Alcatel-Lucent has a strong presence in China while Nokia Networks enjoys considerable dominance in Europe and Asia.
The merged entity can effectively capitalize on emerging Internet-of-thing (IoT) platform and offer triple-play voice, video and data solutions throughout the world. The core focus areas will be next-generation 5G wireless technology, IP and software, defined networking, cloud-based solutions, big data analytics, and sensors and imaging.
A full takeover of Alcatel-Lucent by Nokia will create a network solutions behemoth in the industry with a significant global customer base and solid operational efficiencies. Nokia Networks boasts strong technical efficiency in professional managed services, customer experience management together with a rich portfolio of mobile broadband infrastructure and 4G LTE networks.
On the other hand, Alcatel-Lucent enjoys a relative advantage in IP-based products, optical networking, cloud computing/software-defined networking, fixed broadband network and professional services.
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