The new acquisition deal between Nokia and Alcatel is to make telecommunications equipment companies to contend with the rising China competitors.As gathered from recent news, Nokia Corporation will pay a whooping sum of €400 million (approximately $445 million) to Alcatel, should the acquisition deal fails, or if the Finnish network supplier doesn’t finalize its offer to acquire its French competitor, in accordance with a regulatory filing.
Nokia Corp sealed an agreement in April this year to buy their French competitor Alcatel-Lucent in an agreement aimed at making an European telecommunication-equipment company able to compete with the ever growing Chinese rivals in a better way.
However, if the Finnish company fails to secure regulatory approvals for the deal from the relevant competition authorities, Nokia will have no option than to pay Alcatel-Lucent a sum of €400 million, according to the filing to the U.S. Securities and Exchange Commission.
Furthermore, the filing gets slighter termination fees listed for some other unforeseen circumstances that would hold up such a deal, such as €150 million in case Nokia shareholders fail to endorse the deal by being in agreement to give out Nokia shares, or €150 million if French competition establishment don’t give the go ahead.
The fees are not cumulative in any way, and Nokia would only be forced to pay one fee if the transaction falls through.
However, it was gathered that the acquisition deal is progressing with the SEC filing. With this development, Nokia has proclaimed a milestone in a bid to take over Alcatel-Lucent.
The entire purchase will involve a public offering in US and France, and that is the reason for getting SEC involved. For each A-Lu one, Nokia is giving 0.55, despite the fact that some investors have argued that Nokia is making a very good deal.
Stuffed with the kind of impassable, legalistic language that is apparently mandatory, the filing on its own is largely a technical affair. Nevertheless, there is also a number of chosen unaudited pro forma condensed collective financial information that has not actually been earlier disclosed publicly that try to paint a financial picture of the merged company.