Nokia and China Huaxin sign MoU to create new joint venture combining Nokia China and Alcatel-Lucent Shanghai Bell
Nokia and Chinese industrial investment company, China Huaxin Post & Telecommunication Economy Development Centre (China Huaxin), have signed a memorandum of understanding (MoU) today confirming their intention to combine Nokia’s telecommunications infrastructure businesses in China (Nokia China) and Alcatel-Lucent Shanghai Bell (ASB), a joint venture between the French telecom company and China’s state-owned investment arm, China Huaxin, into a new joint venture.
As agreed under the MoU, Nokia expects to hold 50% plus one share in the new joint venture, with China Huaxin holding the remaining shares. Fair value compensation would be received for the contribution of relevant assets to the joint venture.
The new joint venture is conditional on and would be formed after the closing of Nokia’s planned combination with Alcatel-Lucent. The new joint venture is expected to be a strong national asset based in China capable of delivering value for both parties.
Nokia China and ASB are leaders in the Chinese telecommunications infrastructure market and both are long standing contributors to the development of China.
The new joint venture is planned to operate under the English name of Nokia Shanghai Bell and would be registered in the China (Shanghai) Pilot Free Trade Zone. The new joint venture would have one board of directors, one management team, unified customer and business functions, and one integrated product portfolio and R&D platform.
Rajeev Suri, president and CEO at Nokia Corporation, said: “Today’s agreement 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 such as ‘Internet Plus’ and provide a strong link between Europe and China. We look forward to joining with China Huaxin and ASB to drive innovation for customers in China and to help accelerate the country’s shift to an innovation-driven economy.
“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,” Suri added.
Yuan Xin, chairman, China Huaxin, said: “We are pleased to have signed this agreement with Nokia, and firmly believe the proposed combination would reinforce our companies’ presence in China. By bringing these two entities together, the new company would possess greater capacity for innovation and outstanding R&D capabilities, delivering benefits to our customers and shareholders alike.”
As agreed in the MoU, Nokia and China Huaxin will negotiate the final terms of how the new joint venture would be created. A deadlock mechanism exists within the MoU to ensure final agreement is reached between Nokia and China Huaxin regarding the terms of transfer and valuation of all relevant assets. This mechanism would deliver a resolution if definitive agreement has not been reached within nine months after completion of Nokia’s proposed combination with Alcatel-Lucent.
Until the closing of the proposed combination between Nokia and Alcatel-Lucent, Nokia China and ASB will continue to operate as two independent companies.