Nokia said on Friday it has received approval from the European Commission (EC) for its planned €15.6 billion ($17 billion) merger with Alcatel-Lucent, clearing an important hurdle in its pursuit of the rival telecoms equipment manufacturer.
"The proposed transaction was notified to the European Commission on June 19, 2015 and was cleared today without conditions following a Phase 1 review," the Finland-based company said.
The Commission confirmed in a separate statement that it had approved the deal. It said it had concluded that the transaction would not raise competition concerns, "in particular because the parties are not close competitors and since a number of strong global competitors will remain active after the transaction", such as Ericsson, Huawei, ZTE and Samsung.
The EC also noted that its decision was influenced by the fact that Nokia has a strong presence in the European Economic Area, "where Alcatel-Lucent is a small player, and conversely Alcatel-Lucent has a strong presence in North America, where Nokia's activities are rather limited."
Nokia added that the transaction is still subject to certain conditions, including approval by its shareholders and other regulatory approvals.
As well as approval from European Union anti-trust regulators, the planned merger has now also been cleared in Brazil, Serbia, Albania, Canada, Colombia and Russia, while the antitrust review period has expired in the U.S.
"Both companies will continue to cooperate with the remaining authorities to close their reviews as quickly as possible," Nokia said.
A further requirement is that Nokia holds over 50 per cent of the share capital of Alcatel-Lucent on a fully diluted basis upon completion of the public exchange offer. As things stand, the transaction is expected to close in the first half of 2016.
The deal has not been without controversy, however, and there will no doubt be mixed reactions to the deal's approval by the EC in the days and weeks ahead. At a meeting in late May, for example, Alcatel-Lucent shareholders questioned the board's desire for a deal with Nokia and suggested the price was too low.
The proposed merger has also placed the spotlight on Ericsson, with some industry observers suggesting the company needed to make an acquisition of its own to ramp up its fixed business. In June, Ericsson concluded after a review by its management that it can expand its business without pursuing a major deal, according to Rima Qureshi, Ericsson's chief strategy officer.
It had previously been reported that Ericsson CEO Hans Vestberg had scheduled a meeting with senior management in late May to discuss potential large-scale mergers and acquisitions that would help the company to compete against a merged Nokia and Alcatel-Lucent.
For more:
- see the Nokia release
- see the EC release
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