The deal could create a European telecoms equipment group worth over $42.16 billion, if the regulators love it of course.
A purchase of Alcatel-Lucent by Nokia could cause problems in France. French officials have promoted the idea of creating pan-European giants to compete globally, in the model of Franco-German aerospace firm Airbus. But Alcatel-Lucent is also a major employer and symbolic of French industry.
One French government official said that any deal involving Alcatel-Lucent would likely have to be structured to keep a significant French influence in the new company for the deal to pass muster in Paris.
Such a deal would put the fear of God into the market leader Ericsson
In a joint announcement, the pair said “there can be no certainty at this stage that these discussions will result in any agreement or transaction.”
The deal currently under consideration is a “full combination” that would entail Nokia making a public offer for Alcatel-Lucent stock, the companies said. The deal could still fall apart, they added.
It isn’t clear if the parties have agreed on a valuation. Alcatel-Lucent’s market capitalization stands at roughly $11.63 billion, while Nokia’s market capitalization is about €28 billion.
Talk about a merger has been going on for years. Many have considered a good idea as it would reshape the telecommunications-equipment business by creating a company with a combined 2014 revenue of €25.9 billion and more than 100,000 employees in businesses spanning wireless communications and Internet routing.