Nokia's acquisition of Alcatel-Lucent was cast into doubt by shareholders of the French-U.S. equipment vendor who are unhappy with the €15.6 billion ($17 billion) price agreed by the companies' managers.
Alcatel-Lucent stakeholders challenged management's decision to sell to rival Nokia at the company's annual shareholders meeting on Tuesday. One pointed to Nokia's recent rocky history as evidence that a deal with the Finnish company is perhaps not in Alcatel-Lucent's best interests, while another argued that the price agreed is too low, the Wall Street Journal reported.
The Journal explained that at least half of Alcatel-Lucent's shareholders would need to accept Nokia's offer, which includes a share swap element, for the transaction to be closed. If the required number is not reached, the deal could be renegotiated or dropped, the newspaper noted.
Management at the French-U.S. equipment vendor told shareholders the company must merge with Nokia Networks in order to survive in a wireless market where Alcatel-Lucent lacks "critical mass", the Journal added.
Alcatel-Lucent chairman Philippe Camus said the 2006 merger of Alcatel and Lucent had been mishandled, and that the company is struggling to regain the ground it lost in the wireless equipment market as a result of that mismanagement.
The board's defence of the Nokia deal is the second time this month that Alcatel-Lucent has been forced to defend its decision.
CEO Michel Combes faced down criticism of the proposed merger after Alcatel-Lucent revealed its first quarter net loss had increased from €68 million in 2014 to €78 million in the recent period, as a higher cost of sales offset revenue growth.
In a media call to discuss the results, Combes said the value of the overall deal should not be judged based on the performance of either company in just one financial quarter. He noted that both vendors were standing by full-year targets.
Alcatel-Lucent shareholders were concerned by a 61 per cent year-on-year drop in Nokia Networks' non-IFRS operating profit in the opening quarter.
- view this Wall Street Journal report
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