Nokia is confirmed to be in talks with Alcatel over buying out the French electronics and telecoms company.
Finland-based Nokia described being in ‘advanced discussions’ regarding the acquisition.
We heard rumours of a possible merger yesterday, suggesting Nokia was ready to shell out some £8 billion to pick up the French firm.
Nokia has now released an official statement, which reads: “In relation to recent media speculation Nokia and Alctatel-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.”
It continued: “There can be no certainty at this stage that these discussions will result in any agreement or transaction.”
“A further announcement will be made when appropriate,” Nokia added.
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Speaking to Yahoo regarding the proposed deal, Clairinvest fund manager Ion-Marc Valahu seemed sceptical.
“They could come up with some cost cuts, but just because you combine one weak player with another weak player does not necessarily mean that you will end up with a stronger player,” explained Valahu.
It’s not yet clear whether Nokia is looking to buy Alcatel for its smartphone business, or whether its Chinese and European wireless infrastructure markets are the pulling factor.
Nokia sold off its mobile business to Microsoft last year. This agreement could mean Nokia isn’t trying to buy Alcatel for its smartphone division specifically.
“A merger would mean major risks for Nokia on future costs, as they also have to negotiate with the French government,” said Mikael Rautanen, an Inderes Equity Research analyst, as quoted in the report.
“An acquisition of Alcatel’s wireless division would be much easier. But the deal would be an excellent getaway for Alcatel-Lucent from its difficulties.”