Nokia and investment company China Huaxin are set to create a new joint venture combining Nokia China with Alcatel-Lucent Shanghai Bell (ASB).
The agreement, which is “conditional on and would be formed after the closing of Nokia’s planned combination with Alcatel-Lucent”, will see the Finnish company hold 50 per cent plus one share in the new entity (Nokia Shanghai Bell), it said in a statement.
Through its combination with Alcatel-Lucent, in addition to its own China unit, Nokia will own 50 per cent plus one share of ASB when the deal closes. “Fair value compensation would be received for the contribution of relevant assets to the joint venture,” it noted.
According to Rajeev Suri, president and CEO at Nokia, the move “demonstrates Nokia’s deep commitment to China”.
“Together, with China Huaxin, Nokia will be in an excellent position to support strategic initiatives of the Chinese government and provide a strong link between Europe and China.”
“With this MoU now in place, we will also work closely with our new partners to make the case for swift approval of the proposed combination between Nokia and Alcatel-Lucent by the appropriate Chinese authorities,” he said.
Nokia’s proposed €15.6 billion acquisition of Alcatel-Lucent is going through a rigorous worldwide approval process, and could be finalised by the end of the year.
So far, the deal has been given the nod in a number of key markets, including Europe, India, the US and Brazil.
ASB was set up in 1984 as a joint venture between Alcatel-Lucent and China Huaxin, with the companies claiming it “represents the first foreign investment joint venture in China’s high tech sector”.
The planned joint venture “is expected to be a strong national asset based in China capable of delivering value for both parties”, Nokia added in a statement.