Nokia buys Alcatel-Lucent for €15.6 billion

Nokia shares fell as much as 7% after the deal was announced, while the French firm leaped 16%.

The combined company will have about 114,000 employees and combined sales of around 26 billion euros.

Finnish network equipment maker Nokia said on Wednesday it has agreed to buy Alcatel-Lucent in an all-share transaction that values the smaller French rival at €15.6 billion ($16.58 billion).

Nokia will give Alcatel-Lucent shareholders 0.55 shares in the combined company for each of their old shares, resulting in 33.5 per cent of the entity being in Alcatel's hands and Nokia having 66.5 per cent if the public exchange offer is fully taken up.

The deal will be finalised in the first half of 2016, the companies said.

The takeover will help the companies take on mobile leader Sweden's Ericsson and cut costs amid weak growth prospects in the telecom gear industry. The combined firm will have a global wireless market share of 35 per cent, second only to Ericsson with 40 percent, and ahead of China's Huawei at 20 per cent, according to Bernstein Research.

The combined company will have about 114,000 employees and combined sales of around €26 billion.