Not long ago, Finnish telecom giant Nokia announced that they would be partnering up with French firm Alcatel-Lucent, who essentially runs a similar operation, but on a smaller scale, and buying some serious stake in the company. Given their similar goals and technology, but on different soil, the move makes sense for both parties. Fast forward to today, and Nokia’s ownership of Alcatel Lucent is coming very close to the 95 percent mark, with a deal announced today set to send it over that threshold. Nokia has announced that, once they cross that line, they plan to offer to buy up the rest of the company, making Alcatel-Lucent an official Nokia subsidiary.
The transaction that pushed Nokia’s ownership of Alcatel-Lucent so high, was an agreement that they announced today wherein they purchase a total of 24,392,270 shares of Alcatel-Lucent, along with 9,614,661 bonds that will be converted into new shares or can be traded for existing ones by 2019, and 2,290,001 bonds that will mature in 2020. The cost to Nokia for this rather large deal was not revealed, but it was let out that when the smoke clears, Nokia’s ownership of Alcatel-Lucent will be sitting pretty at 95.16% of the total stake available, which includes the requisite voting rights. Crossing that magical 95% threshold puts Nokia in the clear to make a clean sweep and knock Alcatel-Lucent’s shares off the Paris Stock Exchange, but local trade authorities have the final say on whether or not such a deal will be allowed.
Nokia has not yet announced how much it plans to offer for the remaining stake, saying that they will make a determination after seeing Alcatel’s financial reports for Q2 2016, which should come out on August 4th. A bank will be on hand to aid in valuation, while an impartial third-party expert will be looking over the proposed offer once it’s drawn up and essentially saying how fair of a price it is. The offer will be based on how much Nokia has paid in the past, current share prices, current financial stats for the year and the quarter, and projections based on Alcatel-Lucent’s plans in the near future.