If the acquisition goes through, it would create a carrier networking giant to rival Ericsson and Huawei. It would also mark the final twist in Alcatel-Lucent’s decade-long roller-coaster of existence.
Formed through a merger of Alcatel and Lucent in 2006, Paris-based AlcaLu has struggled to maintain its footing in the telco equipment market as carriers have slashed spending and pivoted toward cheaper, more flexible network hardware and software.
But AlcaLu’s turnaround struggles continue, with the company booking a net loss of €83 million last year and laboring to achieve positive free cash flow in 2015.
Though it holds a significantly larger slice of market share than AlcaLu, Nokia has not been without its own troubles in recent years, only recently emerging from restructuring efforts to grow operating profits at a healthy clip.
Rumors of a Nokia-AlcaLu hookup first surfaced on Monday in a report from the French newspaper Les Echos. Though initial reports centered on a potential Nokia acquisition of AlcaLu’s mobile networks business unit, the companies have confirmed that the deal under discussion is a “full combination,” in which Nokia would make a public offer for AlcaLu stock.
The deal could still fall apart, and would likely face intense political scrutiny from the French government over job cuts and national security questions, as Nokia is based in Finland. French President François Hollande on Tuesday met with Nokia CEO Rajeev Suri and AlcaLu CEO Michel Combes, the Guardian reports.
Nokia stock was down 4 percent in morning trading on Tuesday, while Alcatel-Lucent traded up as much as 9 percent.