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Nokia in Full Merger Talks with Alcatel-Lucent

The deal would help Nokia bolster its mobile infrastructure business against Swedish arch-rival Ericsson.

HELSKINKI, Finland - Finland's Nokia announced on Tuesday that it was in advanced talks to purchase all of its Franco-American rival Alcatel-Lucent (IW 1000/240).

"Nokia and Alcatel-Lucent confirm that they are in advanced discussions with respect to a potential full merger, which would take the form of a public exchange offer by Nokia for Alcatel-Lucent," the company said in a statement.

"There can be no certainty at this stage that these discussions will result in any agreement or transaction," it added.

The announcement came a day after reports that Nokia was in talks to acquire Alcatel-Lucent's wireless infrastructure.

Rumors have swirled since December of a possible deal between the two firms, with France's Les Echos reporting on Monday that executives had been in negotiations since January.

The purchase would represent a significant boost in market share for Nokia. The Alcatel-Lucent wireless infrastructure unit alone accounted for 36% of total sales for the Paris-based company in 2014, according to Bloomberg, generating 4.7 billion euros ($5 billion) in revenue.

The deal would help Nokia bolster its mobile infrastructure business against Swedish arch-rival Ericsson, profiting from Alcatel's position as a leading supplier of 4G and LTE mobile networks and related services.

But the Finnish market did not welcome Tuesday's news. In Helsinki, the Nokia share was down by 6.32% an hour after the announcement.

On the Paris stock exchange however, the Alcatel-Lucent share shot up by 12.14%.  

The Finnish company was the world's biggest mobile phone maker for more than a decade until it was overtaken by South Korea's Samsung (IW 1000/14) in 2012.

In 2014, Nokia sold its mobile phone and tablet division to U.S. software giant Microsoft (IW 500/16).

It has since then sat on most of the 5.4 billion euros made from that sale.

Nokia employs some 55,000 people worldwide, while Alcatel-Lucent employs almost 53,000.

Copyright Agence France-Presse, 2015

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