(Bloomberg) — Nokia Oyj agreed to buy Alcatel-Lucent SA in an all-stock deal valued at 15.6 billion euros ($16.6 billion) to create the world’s largest supplier of equipment that powers mobile-phone networks.
Nokia’s biggest-ever acquisition would result in a company that surpasses Ericsson AB and Huawei Technologies Co. in wireless-infrastructure revenue, according to researcher IDC. The deal would allow Chief Executive Officer Rajeev Suri to bolster Nokia’s position in China, a market of 1.3 billion mobile subscribers, and take on contracts with the two biggest U.S. carriers — Verizon Communications Inc. and AT&T Inc.
Alcatel shares rose 16 percent to 4.48 euros in Paris on Tuesday after the company confirmed it’s in advanced talks to merge with Nokia. Nokia closed 3.6 percent lower at 7.49 euros on the Helsinki exchange.
The takeover would also let Nokia add products used to transmit landline and Internet traffic, giving it a more complete offering to sell to carriers as the amount of data traveling on networks increases with the popularity of Netflix and other video and music services.
Nokia and Alcatel have more than 110,000 workers combined. Suri, who took over as head of Nokia’s networks unit in 2009 and became group CEO last year, has revived the equipment business by cutting more than 25,000 jobs over three years and focusing on more lucrative contracts.
Alcatel shares have more than tripled since Michel Combes became CEO in 2013 as he reduced costs and landed contracts from new customers. Combes has less than eight months left of his three-year turnaround plan, aimed at making Alcatel profitable and helping it generate cash.
Nokia shares have more than doubled since the company agreed to sell its mobile-phone business to Microsoft Corp. in 2013 for about $7.5 billion. That deal left Nokia with net cash of about 5 billion euros at the end of last year.
