Paris--Nokia has struck a 15.6-billion-euro deal to buy its rival Alcatel-Lucent to create the world's biggest supplier of mobile phone network equipment, both firms said Wednesday.
The merger of two companies that were once new technology stars but have since lost some of their lustre will produce a European champion able to take on Nokia's Swedish rival Ericsson or fierce Chinese competition.
The announcement sent shares in Alcatel-Lucent plunging more than 10 percent on Paris's stock market.
Finland's Nokia said it had agreed to give shareholders in its Franco-American rival 0.55 shares in the new merged company for every one of their own.
"This transaction comes at the right time to strengthen the European technology industry," said Alcatel-Lucent boss Michel Combes.
"The global scale and footprint of the new company will reinforce its presence in the United States and China," he added.
The two firms have "highly complementary portfolios and geographies, with particular strength in the United States, China, Europe and Asia-Pacific," Nokia's statement said.
The new firm will go by the name Nokia, be based in Finland, and be run by Nokia's current management team, it said.
The group is targeting savings of 900 million euros ($960 million) in costs by the end of 2019 without further job cuts on top of the restructuring already taking place in Alcatel-Lucent, both companies said.
This is likely to appease the French government, which had expressed concern about jobs disappearing in the country if the merger were to go through.
It has also in the past blocked takeovers of companies it considers national jewels.
The government caused a furore in 2013 when it blocked a bid by US giant Yahoo! to acquire Dailymotion, and then again this month when it thwarted attempts by a Hong Kong telecom's giants to acquire the video-sharing site.
AFP
