How Alcatel Shareholders Can Benefit From The Nokia Deal

In a report published Thursday, JPMorgan analysts mentioned that the deal between Nokia Corporation (NYSE: NOK) and Alcatel Lucent SA (NYSE: ALU) 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.