Nokia (NOK) Takes Control of Alcatel-Lucent (ALU)

January 4, 2016 6:18 AM EST

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The French stock market authority, Autorité des Marchés Financiers (the "AMF"), today published the interim results of the initial offer period of Nokia's public exchange offer for Alcatel-Lucent securities in France and in the United States (the "Offer"), and has declared the Offer successful.

Rajeev Suri, President and CEO of Nokia, said: "We are delighted that the Offer has been successful, and that Alcatel-Lucent's investors share our confidence in the future of the combined company. We will move quickly to combine the two companies and execute our integration plans. As of January 14, 2016, Nokia and Alcatel-Lucent will offer a combined end-to-end portfolio of the scope and scale to meet the needs of our global customers. We will have unparalleled R&D and innovation capabilities, which we will use to lead the world in creating next-generation technology and services."

The interim results indicate that 2 052 812 101 outstanding Alcatel-Lucent ordinary shares, 264 183 778 American Depositary Shares ("ADSs"), 206 784 349 OCEANE 2018 convertible bonds, 37 880 652 OCEANE 2019 convertible bonds, and 16 138 206 OCEANE 2020 convertible bonds have been tendered into the French and/or U.S. offers. As a consequence, if these interim results are confirmed by the AMF in its notice of final results expected on January 5, 2016, and following settlement of the Offer on January 7, 2016, Nokia would hold 76.31% of the share capital and at least 76.01% of the voting rights of Alcatel-Lucent, 89.14% of the outstanding OCEANEs 2018, 24.34% of the outstanding OCEANEs 2019, and 15.11% of the outstanding OCEANEs 2020; this equates to Nokia holding 70.52% of the share capital on a fully diluted basis.

The completion of the Offer was subject to the number of Alcatel-Lucent securities validly tendered into the Offer representing more than 50% of the shares on a fully diluted basis. This condition has been satisfied and the Offer is therefore successful.

Subject to the confirmation of aforementioned numbers by the AMF and assuming conversion of the OCEANEs tendered into the Offer at the improved conversion ratio, Nokia would hold, following settlement of the Offer, 79.32% of the share capital and at least 78.97% of the voting rights of Alcatel-Lucent, as mentioned in the AMF's notice published today.

Following the announcement by the AMF of the final results of the Offer, the two companies will begin to progress their integration plans, with the first day as an operationally combined group on January 14, 2016.

In accordance with Article 232-4 of the AMF General Regulation, the offers in France and in the U.S. will be reopened at the same exchange ratios within 10 French trading days of the publication by the AMF of the final results (which should occur on January 5, 2016). The AMF will publish the timetable of the reopened Offer. Nokia believes it is in the best interests of Alcatel-Lucent shareholders to tender their remaining securities, and invites the remaining Alcatel-Lucent securities holders to tender their shares, ADSs or OCEANE convertible bonds into the reopened Offer.

Any Alcatel-Lucent shares, Alcatel-Lucent ADSs or OCEANE convertible bonds not tendered into the reopened Offer will remain outstanding. After completion of the Offer, Nokia intends to delist Alcatel-Lucent's ADSs from the New York Stock Exchange, meaning they would not be tradeable on any regulated securities exchange, and intends to commence the process of terminating the Alcatel-Lucent ADR program. Subject to applicable law, Alcatel-Lucent would also be de-registered under U.S. securities laws, which would mean significantly less information would be available about the company.

Following closing of the transaction, as previously announced and subject to Nokia shareholder approval, Nokia plans to execute a EUR 7 billion program to optimize its capital structure and return excess capital to Nokia shareholders. This program is planned to include approximately EUR 4 billion in distributions to Nokia shareholders. Nokia has no plans to provide capital returns to remaining holders of Alcatel-Lucent securities.

If Nokia reaches 95% ownership of the share capital and voting rights of Alcatel-Lucent, it intends to squeeze out the remaining shares. In addition, if Nokia reaches 95% ownership of Alcatel-Lucent's fully diluted shares, it intends to squeeze-out the remaining OCEANE convertible bonds.

In addition, Nokia reserves the right, subject to applicable law, to cause Alcatel-Lucent to redeem at par value, plus, as applicable, accrued interest from the date the interest was last paid, to the date set for the early redemption all of the outstanding OCEANEs 2018, OCEANEs 2019 or OCEANEs 2020, if less than 15% of the issued OCEANEs of any such series remain outstanding.

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