Nokia in talks to buy Alcatel-Lucent

Helsinki

NOKIA Oyj is in talks to buy Alcatel-Lucent, a deal that could create a European telecoms equipment group worth over 40 billion euros (S$57.5 billion), and cut costs at two of the industry's weaker players.

In a joint announcement, the Finnish and French companies said there could be "no certainty at this stage that these discussions will result in any agreement or transaction." Analysts and investors also flagged potential opposition from the French government, which has said in the past that it sees the communications industry as strategic, and is sensitive about the job cuts that often go with cost-saving takeover deals. The French economy ministry had no immediate comment.

Nevertheless shares in Alcatel, a group worth about 11 billion euros based on Monday's closing share price, rose 14 per cent on Tuesday morning. Shares in Nokia, worth about 29 billion euros before Tuesday's announcement, dropped 6 per cent.

The statement came in reaction to media reports that the two had revived tie-up talks that have been on and off for years in an industry that is consolidating. REUTERS