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Elliott Management A 'Possible Snag' In Alcatel-Nokia Deal, Wells Fargo Warns

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Elliott Management's recently acquired 1.3 percent equivalent stake in Alcatel Lucent SA (NYSE: ALU) could be a prelude to activist moves to boost Alcatel's share price, an analyst said Monday.

Alcatel agreed earlier this year to be acquired by Finland-based Nokia Corporation (NYSE: NOK) for $16.6 billion in an all-stock deal expected to close in the first half of next year.

Wells Fargo's Maynard Um noted that Elliott's reported stake follows reports in April that Alcatel's second-largest shareholder, Odey Asset Management, said the Nokia offer is too low.

Elliott acquired the stake equivalent in France-based Alcatel using equity swaps, a type of derivative contract, according to a report Sunday in the Financial Times.

Elliott hasn't commented on its intentions regarding Alcatel, "but we don't rule out potential activism to increase the share price," Um said.

Alcatel's acquisition requires the tendering of just 50 percent of its shares and approval from Nokia shareholders.

Elliott, according to the Financial Times, has a history of buying into companies that are in the process of being acquired and calling for a higher price to be paid by the bidder.

The combined company would be based in Finland with a strong presence in France, and would be the second-largest mobile equipment manufacturer in the world.

Amid rough trading for European stocks Monday, Alcatel declined nearly 4 percent at $3.66; Nokia was off about 4.4 percent to $6.91.

Latest Ratings for ALU

Dec 2015Credit SuisseUpgradesNeutralOutperform
Nov 2015BMO CapitalUpgradesMarket PerformOutperform
Sep 2015Deutsche BankUpgradesHoldBuy

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Posted-In: Elliott Management Maynard Um Wells FargoAnalyst Color M&A Analyst Ratings


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