Nokia Confirms Combination Talks With Alcatel-Lucent

(RTTNews) - Confirming media speculation, network equipment maker Nokia Oyj (NOK) Tuesday said it is in advanced discussions with French telecom equipment maker Alcatel-Lucent (ALU) regarding a potential full combination, which would take the form of a public exchange offer by Nokia for Alcatel-Lucent. Alcatel's stock surged in early trade, while Nokia shares were down.

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

Both companies make base stations and antennas which transmit mobile-phone calls and data. A deal with Alcatel will help Nokia compete better with Sweden's Ericsson AB (ERIC) and strengthen its position in China.

Alcatel has a market capital of about $12 billion, and Nokia has a market value of $30 billion. Any deal will require the consent of the French government, which has previously blocked corporate mergers in the country.

The Financial Times reported Monday that the Helsinki-based company was in advanced talks to buy Alcatel-Lucent's wireless business.

Meanwhile, Bloomberg also reported that Nokia may announce an agreement to buy Alcatel's wireless assets as early as this week.

For long, Alcatel-Lucent and Nokia have had merger talks, but without any conclusive results. In 2013, Nokia was reported to have mulled options including a combination with Alcatel-Lucent's wireless-networks business. Germany's Manager Magazin reported in December 2014 that the merger talks had begun again.

Nokia has been struggling to spur growth at its telecommunication network equipment business, and to stay trim, had divested its struggling handset business in 2013 to Microsoft Corp. (MSFT) for about $7 billion.

Nokia fell 6.8 percent in early trade in Helsinki to 7.23 euros, while Alcatel surged 11.6 percent to 4.31 euros.