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Alcatel-Lucent and Nokia are considering a merger

Alcatel-Lucent and Nokia confirmed earlier this week that they’re in advanced talks about a potential merger between the two companies. Considering how Alcatel-Lucent is a world leader in fixed networks and Nokia is similarly specialized in mobile broadband, a merger between the two is seen as a wise move and could create a a telecom superpower, but there are some risks. 

Finland’s Nokia confirmed Tuesday that it is in “advanced” merger discussions with telecoms company Alcatel-Lucent, following rumors of a tie-up. Nokia shares fell up to 6 percent following the news, while Alcatel-Lucent traded up to 13 percent higher. In a joint statement, the companies said a potential merger would take the form of a public exchange offer by Nokia for the French company. Urging caution, the statement added: “There could be no certainty at this point that these discussions will result in any agreement or transaction.” It is unclear whether Nokia, which is a backbone of the Finnish economy, would acquire all of Alcatel-Lucent’s assets, or just its wireless business. Analysts at Credit Suisse and Citi concurred that purchasing Alcatel-Lucent’s (ASU) wireless unit would be a wise strategic move for Nokia (NSN), because of the former’s presence in the U.S.

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