Nokia announced Wednesday that it has bought French competitor Alcatel-Lucent in its quest to become a top telecom provider.
The deal is valued at $16.6 billion, and is also the biggest acquisition the Finnish telecom giant has ever made, according to the International Business Times. The merged company will use the Nokia brand while also keeping the Alcatel-Lucent's Bell Labs name for research and development.
Alcatel shareholders will own 33.5 percent of the new company, while Nokia shareholders will own 66.5 percent. The new company will have about 114,000 employees.
"With more than 40,000 R&D employees and spend [sic] of 4.7 billion euros in R&D in 2014, the combined company will be in a position to accelerate development of future technologies including 5G, IP and software-defined networking, cloud, analytics as well as sensors and imaging," Nokia said in a statement.
Rajeev Suri, chief executive officer of Nokia, said Alcatel's products will give his company "the scale to lead in every area in which we choose to compete," BBC News reported.
"I firmly believe that this is the right deal, with the right logic, at the right time," Suri added.
The combined company will have a market share of 35 percent, right behind Sweden's Ericsson, which has a market share of 40 percent.
Some analysts, such as Inderes Equity Research's Mikael Rautanen, believe it will take a while for Nokia to reap the rewards from the new deal, and that there is a chance that "the merger will become a long and rocky road and investors lose their patience following through the integration programme that will take years," BBC News reported.
However, Jukka Oksaharju from Nordnet brokerage said Nokia got a good price for the purchase.
"We know that there are risks related to France and the cost cuts, but I believe that Nokia has calculated a margin of safety to the deal price," Oksaharju said.
Nokia and Alcatel are expected to close the deal in the first half of next year.
