Nokia is about to acquire its French Network rival Alcatel-Lucent, as the company’s shareholder gave a green light to a deal estimated at $17.6 billion, according to Bloomberg. If this is completed, it will basically double the company’s size, transforming it into one of the biggest makers of network equipment, able to compete with rivals like Ericsson or Huawei.
During a meet held in Helsinki this Wednesday, the investors reached the conclusion that it’s best for Nokia to purchase its Paris-based rival. Alcatel-Lucent has been a key supplier of Internet protocol-based networks and cloud software, enabling efficient data travelling.
In order to reach an agreement, more than half of Alcatel investors need to tender their shares. This would double Nokia’s size, reaching a total of 110,000 workers, increasing its scale in mobile-networking equipment, alongside providing access to IP routing products, cloud software assets and R&D resources, all belonging to Alcatel.
The main purpose behind this deal is Nokia’s ambition to reshape the company and compete with the likes of Sweden-based Ericsson AB and China’s Huawei Technologies Co. Also, they need to focus on a new market segment, after selling the phone business to Microsoft last year, while its maps unit was given to a group of German car manufacturers.
Currently, the market is registering a stagnating demand for wireless network equipment, so it’s consolidating, as companies are looking forward to cheaper and faster ways to move data in their systems.
Nokia’s plans of acquiring Alcatel-Lucent were revealed a few months ago and, shortly after, Ericsson and Cisco Systems Inc., also announced a partnership, with the purpose of increasing sales. The latter is currently the largest routers and switches manufacturer in the world.