How Alcatel Shareholders Can Benefit From The Nokia Deal

In a report published Thursday, JPMorgan analysts mentioned that the deal between

and

could benefit the former by way of cost synergies, while the latter's shareholders were poised to benefit from cash return after the deal closes. Nokia announced the acquisition of Alcatel-Lucent in an all stock deal that values the latter company at €15.6bn, fully diluted, which implies an acquisition price of €4.27 per share for ordinary ALU shareholders. After the closure of the proposed deal, Alcatel-Lucent's shareholders would own 33.5 percent of the fully diluted share capital of the combined entity, while Nokia's shareholders would have 66.5 percent. "The combined firm will be #2 player in carrier networking with revenue close to #1 player, Ericsson," the analysts wrote, while adding, "Nokia/ALU expect cost synergies of €900m pa and aim to achieve them on a full-year basis in 2019, assuming the transaction closes in 1H16." Nokia has also commenced a review of strategic options, including the potential divestment of its HERE business. If this segment is sold and Alcatel-Lucent sells its submarine business, the combined company "will have a very substantial cash trove to initiate an accretive share buy-back, which would benefit both sets of shareholders," the report added.