Rumours of a possible partial acquisition have been circulating for some time on the markets. Yet Tuesday's news is that the offer would entail a full public exchange takeover of the entire business. The potential acquisition of the smaller firm, Alcatel-Lucent, in its entirety, is the big surprise, according to analyst Mikael Rautanen.
Rautanen, an expert from consulting firm Inderes, says that a full takeover would bring new business in sectors which are not at present at the core of Nokia’s strategy, for example undersea networks. If the buyout were to go ahead it would appear to strengthen Nokia's competitive edge over industry leader Ericsson.
However, the Finnish firm has cautioned that there's no certainty a deal will be brokered.
Company top brass to meet French President
The CEOs of both Nokia and Alcatel-Lucent's have been invited to meet with French President Francois Hollande on Tuesday.
The French government is keen to see the creation of an industrial powerhouse but has concerns about the impact on French jobs, said an Economy Ministry source.
If the takeover proceeds, it would significantly boost Nokia’s market share in the wireless infrastructure sector, adding Alcatel’s 4.7 billion euro revenue from that sector to the Finnish company’s portfolio.
At present, Chinese owned Huawei and Ericsson are rival front-runners in the bid to dominate the telecoms equipment industry and, up until now, both Nokia and Alcatel-Lucent's limited business in that realm has made them small fry in comparison. As such, a large-scale deal could be seen as a game-changer for the industry.
The value of Alcatel group shares, worth about 11 billion euros in total, rose 14 percent on Monday, when French media reported news of a possible merger. Shares in Nokia, worth about 29 billion euros, were down by over six percent when the official news broke on Tuesday morning.