Nokia confirms Advanced Merger Talks to buy Alcatel-Lucent

On Tuesday, Finnish technology major Nokia confirmed that it was in advanced discussions to buy its French telecommunications equipment rival, Alcatel-Lucent.

Since months, rumors had been floating regarding potential transaction for parts of Alcatel-Lucent, as the company sought to sell assets and focus on its more profitable divisions.

Nokia, on Tuesday, said that the companies, having combined revenues of about $27 billion, and the ones that would create a global networking giant, had been discussing a 'potential full combination'. This combination would most probably take the form of a public exchange offer by the Finnish company for Alcatel-Lucent.

In a news release, Nokia said, "There can be no certainty at this stage that these discussions will result in any agreement or transaction".

Nokia has sold its handset and services business to Microsoft for around $7.2 billion in 2013, and it shifted its focus towards its telecommunications network equipment, mapping and new technology businesses.

Alcatel-Lucent, based in Boulogne-Billancourt, France, deals with a variety of telecommunications equipment, including for networks, broadband connections and cloud computing.

In 2014, it posted revenue of 13.2 billion euros, or about $14 billion, and employed around 52,000 people, whereas Nokia, based in Espoo, Finland, posted sales of _12.7 billion in 2014 and employed about 61,000 people.

On Tuesday, shares of Nokia showed a 6.2% fall in early trading in Helsinki, while shares of Alcatel-Lucent jumped 13.9% in early trading in Paris.

European shares also jumped higher on Tuesday, due to the support by mergers and acquisitions activity in the telecoms equipment sector, when Nokia entered into talks to buy Alcatel Lucent.

The announcement surprised a lot of people as reports had suggested that Nokia may be interested in Alcatel's mobile networks arm and not the entire firm.