Nokia just announced a huge acquisition today, confirming that it is purchasing one of its closest competitors in the network equipment market: Alcatel-Lucent. The purchase price was a hefty $16.6 billion in an all-stock transaction.
The acquisition will allow Nokia to better compete with Chinese players like Huawei, which have flooded the market with low-cost networking equipment. According to Bernstein Research, the combined companies will take over the second place spot in the mobile network hardware market with a 35 percent share. Ericsson will maintain its first place position with a 40 percent share, and hard-charging Huawei is coming on strong in third place with 20 percent of the market.
The combined synergies will also help Nokia to speed up development of 5G wireless technologies, and optimize core operations including IP routing and cloud applications/services. The combined company will be able to better compete in the cutthroat networking market and drive innovation thanks to not only Nokia FutureWorks and Nokia Technologies, but also the newly acquired and infamous Alcatel-Lucent Bell Labs.
"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 Nokia CEO Rajeev 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.”
With Alcatel-Lucent now coming under the Nokia umbrella, the two companies will have a combined 114,000 employees (40,000 of those employees will be dedicated solely to R&D) and combined yearly sales of roughly $27.5 billion. The newly joined company will be headquartered in Finland and will retain R&D centers in the United States, China, Germany, and France. In addition, the well known Bell Labs brand will stick around under Nokia’s stewardship.