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Report: Nokia could team with ALU to buy out Siemens

Sources say negotiations are ongoing as deadline approaches to renew the Nokia Siemens networking joint venture

By CAROLINE GABRIEL

Published: 7 February, 2013

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If Alcatel-Lucent was a case of tying two rocks together and hoping they would float, it's hard to imagine combining that firm with Nokia Siemens, another result of a troubled merger. However, Bloomberg reports, citing the usual unnamed sources, that talks are now taking place to see Nokia buying out its German partner, along with a strategic partner such as ALU.

The talks have taken on a certain degree of urgency, apparently, because April marks the deadline for a shareholder renewal of the NSN deal. Siemens has made no secret of its wish to exit a venture which is now remote from most of its other businesses and has had a rocky financial history.


However, Nokia still has huge financial challenges of its own, not to mention ALU's $1.85bn fourth quarter loss and change of CEO, all of which would seem to mitigate against a rapid agreement. However, Nokia - which was also said to want to get out of NSN - may look more kindly on keeping hold of the unit these days, since it was a highlight of the Finnish firm's most recent quarterly results. Last year, there were reports that both partners wanted to get out, and to sell all or part of their JV to another vendor or a private equity group. However, a private equity deal fell apart last year and both parents had to inject more funds into their 50:50 business.

In Q412, NSN reported record operating margins and strong growth in sales and operating profit as its refocusing exercise, to reduce costs and concentrate only on mobile broadband, started to show results. Last month Nokia CEO Stephen Elop said the JV had had "a tremendous and successful 2012", but also told Reuters he was open to "all options" for the unit.

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