Nokia targets IoT with proposed takeover of Alcatel-Lucent
April 16, 2015
Nokia is to buy rival Alcatel-Lucent for €15.6bn in a move that should position the combined company to attack the growing IoT market.
“The combined company will be uniquely positioned to create the foundation of seamless connectivity for people and things wherever they are,” said a Nokia statement. “This foundation is essential for enabling the next wave of technological change, including the internet of things and transition to the cloud.”
Each company's board of directors has approved the terms of the proposed transaction, which is expected to close in the first half of 2016. The proposed transaction is subject to approval by Nokia's shareholders, completion of relevant works council consultations, receipt of regulatory approvals and other customary conditions.
The combined company’s R&D capabilities include Alcatel-Lucent's Bell Labs and Nokia's FutureWorks, as well as Nokia Technologies, which will stay as a separate entity with a clear focus on licensing and the incubation of new technologies.
With more than 40,000 R&D employees and spend of €4.7bn in R&D in 2014, the combined company will be in a position to accelerate development of future technologies including 5G, IoT, IP and software-defined networking, cloud, analytics as well as sensors and imaging.
The companies have complementary portfolios and geographies, with particular strength in the USA, China, Europe and Asia-Pacific. They will also bring together fixed and mobile broadband, IP routing, core networks, cloud applications and services. This combination is expected to create access to an expanded addressable market with improved long-term growth opportunities.
“Consumers are looking to access data, voice and video across networks of all kinds,” said the Nokia statement. “In this environment, technology that used to operate independently now needs to work well together. That is not always the case today, but together Nokia and Alcatel-Lucent are uniquely suited to helping telecoms operators, internet players and large enterprises address this challenge.”
The combined company will be called Nokia Corporation, with headquarters in Finland and a strong presence in France. Risto Siilasmaa is planned to serve as chairman and Rajeev Suri as chief executive officer.
"Together, Alcatel-Lucent and Nokia intend to lead in next-generation network technology and services, with the scope to create seamless connectivity for people and things wherever they are,” said Suri. “Our innovation capability will be extraordinary, bringing together the R&D engine of Nokia with that of Alcatel-Lucent and its iconic Bell Labs. We will continue to combine this strength with the highly efficient, lean operations needed to compete on a global scale.”
He said the combined company would have “the comprehensive portfolio necessary to enable the internet of things and transition to the cloud”.
Michel Combes, chief executive officer of Alcatel-Lucent, added: "A combination of Nokia and Alcatel-Lucent will offer a unique opportunity to create a European champion and global leader in ultra-broadband, IP networking and cloud applications.”
He said the transaction came at the right time to strengthen the European technology industry.
“We believe our customers will benefit from our improved innovation capability and incomparable R&D engine under the Bell Labs brand,” said Combes. “The global scale and footprint of the new company will reinforce its presence in the United States and China.”