Why Nokia is buying Alcatel-Lucent for €15bn

Here's how Nokia will use the networking giant to innovate

Nokia will acquire networking giant Alcatel-Lucent for 15.6 billion, confirming the deal a day after rumours suggested the tie-up was looming. 

"Our innovation capability will be extraordinary, bringing together the R&D engine of Nokia with that of Alcatel-Lucent and its iconic Bell Labs," said Rajeev Suri, Nokia CEO.

"We have hugely complementary technologies and the comprehensive portfolio necessary to enable the Internet of Things and transition to the cloud."

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Michel Combes, CEO of Alcatel-Lucent, said the firms would lead in other areas, including ultra-broadband, IP networking and cloud applications. 

"With more than 40 000 R&D employees and spend of 4.7 billion in R&D in 2014, the combined company will be in a position to accelerate development of future technologies including 5G, IP and software-defined networking, cloud, analytics as well as sensors and imaging," the companies said in a joint statement. 

The pair of CEOs claimed the combined company will have leading positions in key markets including the US and China, while Combes also stressed that the "transaction comes at the right time to strengthen the European technology industry". 

Nokia predicted its addressable market will expand by 50 per cent, and it will save 900m annually in synergies by 2019. 

The deal is expected to close in the first half of 2016, after approval from shareholders and regulators. 

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It follows Nokia's 4.6 billion sale of its handset business to Microsoft that was finalised last year, and could give it a shot in the arm as it bids to innovate to enter new markets.

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