Nokia seeks to regain its lost glory with US$16.6-billion Alcatel-Lucent takeover

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Nokia Oyj is again seeking global domination in its chosen industry.

The erstwhile world leader in handsets looks set to regain some of its lost glory in a deal that consigns Alcatel-Lucent SA to the history books as the French company’s name is erased from the combined brand. The group’s headquarters will be in Finland and the US$16.6 billion takeover will make Nokia the biggest supplier of equipment that powers mobile-phone networks.

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“Having their brand take over the Alcatel-Lucent brand is a good idea, on their part,” said David J. Cord, author of a book The Decline and Fall of Nokia. “That would be a good way to keep them in the industry and be better perceived in the industry.”

The deal caps a history of twists for Nokia, which began as a wood-pulp mill in 1865, and produced everything from rubber boots to toilet paper and televisions before transforming itself into the world’s biggest handset maker with a market value that, at its peak, reached US$320 billion. Finns looked to Nokia as a symbol of their country’s transformation into a technology- driven economy.

Nokia was such a part of Finnish culture and identity, and it was hard for Finns to see them fall

The nation then watched on in disbelief as Nokia was brought to its knees by rivals Apple Inc. and Samsung Electronics Co., culminating in the 2013 disposal of the flagship mobile-phone unit to Microsoft Corp. under then Chief Executive Officer Stephen Elop.

“Nokia was such a part of Finnish culture and identity, and it was hard for Finns to see them fall,” Cord said by phone. “Now they’re making these big international moves and they’re really growing with acquisitions, I think this will help a lot with the Finnish psyche in that a small country can have a globally successful company.”

Nokia’s dark years weighed heavily on the northernmost euro member’s economic output, which remains below its 2008 level. In 2000, Nokia accounted for about 4 per cent of Finland’s gross domestic product. It was equivalent to just 0.2 per cent by 2013, according to Jyrki Ali-Yrkko, an economist at Helsinki-based researcher ETLA.

CEO Rajeev Suri now looks set to drive the 150-year-old company into its next reincarnation. Nokia’s acquisition of Alcatel-Lucent is the biggest corporate transaction in Finnish history, dwarfing Telia AB’s 2002 takeover of Sonera Oyj for 9.9 billion euros (US$10.5 billion) and Nokia’s 5.4 billion-euro sale of the handsets.

“Nokia has been able to, without disappearing, reinvent themselves, and they’ve done this over and over again throughout their long history,” Cord said.

For the French, who back the merger, the deal marks the end of a company that had represented the nation’s engineering prowess and its long history of innovation. A takeover by Nokia, which is still subject to shareholder and regulatory approval, would be the final chapter in the history of the onetime French industrial giant, with former operations ranging from spaceflight to cutting-edge theoretical physics.

Created with the 2006 merger of Alcatel SA with U.S.-based Lucent Technologies, which both had roots in the telecommunications industry of the late 19th century, the company accumulated billions of euros in losses, weakened by Asian competition and slower spending on network equipment by mobile carriers during the financial crisis.

“The turnaround is a lot faster” for companies these days, Cord said. “Just a couple of years ago, many people thought that Nokia could go bankrupt and now look at them — they’re making one of the largest acquisitions in the networks industry.”

–With assistance from Matthew Campbell in London.