​Nokia and Alcatel confirm 'advanced talks' over merger

Nokia and Alcatel-Lucent have confirmed they're in advanced talks over a potential full merger, which could create a giant network equipment vendor better positioned to compete with Ericsson, Huawei, and Cisco.

Nokia may acquire its networking rival Alcatel-Lucent as early as this week, if the Finnish company can get the approval of the French government.

Following reports last week that Nokia is looking to sell its Here mapping division, the company is now aiming to bulk up its networks business with a full acquisition of Paris-headquartered Alcatel-Lucent.

Nokia and Alcatel today confirmed they are in "advanced talks" and are assessing a full merger, which would include Alcatel-Lucnet's core networking, wireless, and fixed-line access equipment businesses.

"Nokia and Alcatel-Lucent confirm that they are in advanced discussions with respect to a potential full combination, which would take the form of a public exchange offer by Nokia for Alcatel-Lucent," Alcatel-Lucent said. Nokia released an identical statement.

Both companies added that there is "no certainty at this stage that these discussions will result in any agreement or transaction".

An earlier report today by Bloomberg suggested it was more likely Nokia would only acquire Alcatel-Lucent's wireless business, in order to put it on a better footing to compete with its Swedish rival Ericsson.

Alcatel's wireless business is the second biggest unit in the company, accounting for €4.7bn of its €7.16bn full year revenues for access equipment in 2014. Its core networking business, which sells IP router equipment, earned €6bn in 2014.

Any deal will require the approval of the French government to proceed, which Nokia executives are in the process of seeking, according to Bloomberg.

It's far from the first time Nokia has cast an eye over Alcatel. In December, both companies' stock jumped on rumours of a possible merger reported in a German magazine, though neither company was willing to comment on the rumours.

Soon after Nokia agreed to sell its handset business to Microsoft, the Finnish company reportedly rekindled its on again, off again talks with Alcatel-Lucent to acquire its wireless unit.

The confirmed talks between Nokia and Alcatel follow a report last week that Nokia was looking to offload its Here mapping business. The company estimated the value of Here at around $2bn, marking a significant fall in value compared to the $8.1bn it spent on acquiring Navteq in 2007.

According to Bloomberg, Nokia reached out to Uber, a "group of German carmakers," and private-equity firms as potential buyers for Here.

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