Nokia says it has agreed to buy French telecoms equipment company Alcatel-Lucent in a Euro15.6 billion (US $16.6 billion) takeover deal.
The Finnish company will give Alcatel-Lucent shareholders 0.55 shares in the combined company for each of their old shares, resulting in 33.5 percent of the entity being in Alcatel's hands and Nokia having the remaining 66.5 percent if the tender offer is fully taken up.
Both firms said their boards had agreed the takeover and they expected it to go through in the first half of next year. The merger will form a European telecoms equipment group worth more than euro40 billion.
Nokia's chief executive, Rajeev Suri, said the firms' complementary technologies would give them "the scale to lead in every area in which we choose to compete".
By picking up Alcatel-Lucent, with its 52,000-strong workforce, Nokia said its new addressable market was 50% larger, increasing to 130 billion euros from 84 billion euros.
"With more than 40 000 research and development (R&D) employees and spend of 4.7 billion euros in R&D in 2014, the combined company will be in a position to accelerate development of future technologies including 5G, IP and software-defined networking, cloud, analytics as well as sensors and imaging," Nokia said in a press release Wednesday.