Nokia has announced that it plans to move ahead with the purchase of Alcatel-Lucent, less than one day after confirming that the two companies were discussing a deal.
Nokia will pay $16.6 billion in shares for the rival telecom equipment maker. The merger is expected to close in the first half of next year.
The marriage of Nokia and Alcatel-Lucent will strengthen its position against rivals like Ericsson, Samsung, and Huawei, though the consolidation means that carriers now have fewer options when purchasing equipment.
On the other hand, the synergies between Nokia and Alcatel-Lucent may allow it to cut research and development costs and deploy new services, including 5G infrastructure, more quickly.
Despite concerns about antitrust concerns, the deal already has the backing of the French government.
In a statement, Alcatel-Lucent CEO Michel Combes said “This transaction comes at the right time to strengthen the European technology industry. We believe our customers will benefit from our improved innovation capability and incomparable R&D engine under the Bell Labs brand. The global scale and footprint of the new company will reinforce its presence in the United States and China.”
Once merged, the company will take on the Nokia name, while Nokia chairman Risto Siilasmaa and CEO Rajeev Suri will hold on to those roles. Three employees from Alcatel-Lucent will serve on the new company’s board, including the role of vice chairman.