Nokia has launched a €15.6bn agreed all-share takeover offer for Alcatel-Lucent aimed at creating a Finnish-French rival to Ericsson and Huawei in the telecoms equipment industry.

The Finnish company said on Wednesday that it would offer 0.55 new shares in Nokia for every Alcatel share, which it said was equivalent to €4.27 a share, a 28 per cent premium over the French group’s average stock price over the past three months.

The Finnish group’s shareholders will own about 66.5 per cent of the combined business, which will remain headquartered just outside Helsinki.

At a press conference in Paris, Rajeev Suri, chief executive of Nokia, said the deal would take between nine and 12 months, and be completed during the first half of 2016 “at the earliest”.

He said that the two companies were targeting €900m of cost synergies by 2019 and €200m in reduced interest expenses by 2017.

He confirmed that the resulting company would have its headquarters in Finland and operate under the Nokia name but added that France would continue to be important as “a major centre for innovation”. He expected to add several hundred new positions in research and development in the country targeting new graduates.

As part of the deal, Nokia also committed to spend €100m on setting up an investment fund to back French start-ups.

Mr Suri and Risto Siilasmaa, the company’s chairman, will both continue in their jobs at the new company.

Mr Siilasmaa spoke of the need to consolidate to compete more effectively. “While Nokia had the leadership in mobile broadband, we did not have the scope to cover all the other necessary technology areas,” said the Nokia chairman.

Similarly, Michel Combes, chief executive of Alcatel-Lucent, echoed this view. “We had a mobile activity that was insufficient to compete with our principal rivals . . . so rapprochement with Nokia seemed crystal clear to us,” he said.

The deal has been greeted with some scepticism among Nokia shareholders and former executives, who remember not only the difficult tie-up between the Finnish group and Siemens’ telecoms equipment assets but also the long struggle to merge Alcatel and Lucent successfully.

Nokia’s shares rebounded on Wednesday, rising 4.7 per cent to €7.84 after falling 3.6 per cent on Tuesday. Alcatel’s suffered the reverse phenomenon, falling 9 per cent to €4.06 after a 16 per cent jump on Tuesday.

Based on Nokia’s share price on Wednesday morning, its offer is worth €4.31 per Alcatel share compared with a value of €4.12 at Tuesday’s closing prices.

“Doing merger with Alcatel crazy . . . Alcatel-Lucent is and will be a mess [plus the] French government,” Juha-Pekka Helminen, Nokia’s former strategy director, wrote on Twitter, reflecting concern in Finland about French political meddling in a combined company.

Emmanuel Macron, France’s economy minister, backed the proposed acquisition on Tuesday in a shift of tone over cross-border tie-ups, saying: “It’s a good move for Alcatel-Lucent because it is a move for the future.”

In the first reaction from a Finnish politician, Olli Rehn, the former European commissioner tipped to become a minister after Sunday’s parliamentary elections, told the Financial Times that it was a good deal for the continent. “Europe needs strong and competitive companies in the face of advancing globalisation. This is important for the sake of sustainable growth and sustained employment,” he said. “The creation of Nokia-Alcatel is thus a positive move to enhance Europe’s competitive advantage in the critical technological field of telecom networks.”

The combined company would have had revenues of €25.9bn last year, making it slightly bigger than Sweden’s Ericsson and China’s Huawei, which lead the telecoms equipment industry.

Nokia said the joint company would have had underlying operating profit of €2.3bn, reported operating profit of €300m and net cash of €7.4bn assuming the conversion of both groups’ convertible bonds.

The Finnish group also announced that its Here mapping business was potentially up for sale, saying: “The board of directors of Nokia believes this is the right moment to assess the position of Here within the proposed new Nokia business.”

The two transactions would crown Nokia’s turnround from a struggling mobile phone maker — a business it sold in 2013 to Microsoft — to one of three companies dominating a heavily consolidated telecoms equipment industry.

Nokia was advised by JPMorgan while Zaoui & Co acted for Alcatel.

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