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As filed with the Securities and Exchange Commission on November 12, 2015

Registration No. 333-206365

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Amendment No. 3 to

Form F-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

Nokia Corporation

(Exact name of registrant as specified in its charter)

 

 

 

Republic of Finland		3663		Not Applicable
(State or other jurisdiction of incorporation or organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification Number)

Karaportti 3, FI-02610 Espoo, Finland, +358 (0) 10-448-8000

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

 

 

Genevieve A. Silveroli, Nokia USA Inc., 6000 Connection Drive, Irving, Texas 75039, +1 (972) 374-3000

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

 

Copies to:

 

Riikka Tieaho Vice President, Corporate Legal Nokia Corporation Karaportti 3 FI-02610 Espoo Finland Tel. No.: +358 (0) 10-448-8000		Scott V. Simpson Michal Berkner Skadden, Arps, Slate, Meagher & Flom (UK) LLP 40 Bank Street London E14 5DS United Kingdom Tel. No.: +44 20-7519-7000

 

 

Approximate date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective.

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)  ¨

Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)  x

 

 

The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until this Registration Statement shall become effective on such date as the Securities and Exchange Commission (the “SEC”), acting pursuant to said Section 8(a), may determine.

 

 

 

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Exchange Offer/Prospectus

The U.S. Offer to exchange Alcatel Lucent Shares and OCEANEs set forth in this exchange offer/prospectus is not made to any person located in the European Economic Area and the U.S. Offer to exchange Alcatel Lucent ADSs set forth in this exchange offer/prospectus is only made to persons located in the European Economic Area pursuant to an exemption or exemptions from the Prospectus Directive (Directive 2003/71/EC, as amended). In addition, for the purposes of the proposed French Offer and Admission (both terms as defined below), this exchange offer/prospectus is not offer documentation or a prospectus and no such person should subscribe for or purchase any transferable securities referred to in this document except on the basis of information contained in the prospectus approved by the Finnish Financial Supervisory Authority and “passported” in France in accordance with the Prospectus Directive (the “Listing Prospectus”), and the separate French Offer documentation filed with the French stock market authority (Autorité des marchés financiers, or “AMF”) (the “French Offer Documentation”), which in each case are proposed to be published by Nokia in due course in connection with the proposed French Offer and the Admission of the Nokia Shares to Euronext Paris. A copy of the Listing Prospectus and the French Offer Documentation will, following publication, be available on Nokia’s website at www.nokia.com. None of the Listing Prospectus, the French Offer Documentation or the information on Nokia’s website forms a part of this exchange offer/prospectus, nor are such documents incorporated by reference herein.

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U.S. Offer to Exchange

All

Ordinary Shares held by U.S. Holders

American Depositary Shares

OCEANEs held by U.S. Holders

of

ALCATEL LUCENT

for

0.5500 Nokia Share per Alcatel Lucent Ordinary Share

0.5500 Nokia American Depositary Share per Alcatel Lucent American Depositary Share

0.6930 Nokia Share per 2018 Alcatel Lucent OCEANE

0.7040 Nokia Share per 2019 Alcatel Lucent OCEANE

0.7040 Nokia Share per 2020 Alcatel Lucent OCEANE

by

NOKIA CORPORATION

Nokia Corporation (“Nokia”), a Finnish corporation, is conducting, upon the terms and subject to the conditions set forth in this exchange offer/prospectus and the French Offer Documentation, an exchange offer comprised of two offers (separately, the “U.S. Offer” and the “French Offer” and collectively, the “Exchange Offer”). The U.S. Offer is being made pursuant to this exchange offer/prospectus to:

 

•

all U.S. holders (within the meaning of Rule 14d-1(d) under the U.S. Securities Exchange Act of 1934 (the “Exchange Act”)) of outstanding ordinary shares, nominal value EUR 0.05 per share (the “Alcatel Lucent Shares”) of Alcatel Lucent, a French société anonyme (“Alcatel Lucent”),

 

•

all holders of outstanding Alcatel Lucent American depositary shares, each representing one Alcatel Lucent Share (the “Alcatel Lucent ADSs”), wherever located, and

 

•

all U.S. holders of outstanding (i) EUR 628 946 424.00 Alcatel Lucent bonds convertible into new Alcatel Lucent Shares or exchangeable for existing Alcatel Lucent Shares due on July 1, 2018 (the “2018 OCEANEs”), (ii) EUR 688 425 000.00 Alcatel Lucent bonds convertible into new Alcatel Lucent Shares or exchangeable for existing Alcatel Lucent Shares due on January 30, 2019 (the “2019 OCEANEs”) and (iii) EUR 460 289 979.90 Alcatel Lucent bonds convertible into new Alcatel Lucent Shares or exchangeable for existing Alcatel Lucent Shares due on January 30, 2020 (the “2020 OCEANEs” and, together with the 2018 OCEANEs and the 2019 OCEANEs, the “OCEANEs” and, together with the Alcatel Lucent Shares and the Alcatel Lucent ADSs, the “Alcatel Lucent Securities”).

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Holders of Alcatel Lucent ADSs located outside of the United States may participate in the U.S. Offer only to the extent the local laws and regulations applicable to those holders permit them to participate in the U.S. Offer. Holders of Alcatel Lucent Securities who are restricted from participating in the U.S. Offer pursuant to the Sanctions (as defined below) may not participate in the U.S. Offer.

For every Alcatel Lucent Share you validly tender into, and do not withdraw from, the U.S. Offer, you will receive 0.5500 share of Nokia (a “Nokia Share”). For every Alcatel Lucent ADS you validly tender into, and do not withdraw from, the U.S. Offer, you will receive 0.5500 Nokia American depositary share (a “Nokia ADS”), each Nokia ADS representing one Nokia Share. For every 2018 OCEANE you validly tender into, and do not withdraw from, the U.S. Offer, you will receive 0.6930 Nokia Share, for every 2019 OCEANE you validly tender into, and do not withdraw from, the U.S. Offer, you will receive 0.7040 Nokia Share, and for every 2020 OCEANE you validly tender into, and do not withdraw from, the U.S. Offer, you will receive 0.7040 Nokia Share.

The French Offer to exchange 0.5500 Nokia Share for every Alcatel Lucent Share, 0.6930 Nokia Share for every 2018 OCEANE, 0.7040 Nokia Share for every 2019 OCEANE, and 0.7040 Nokia Share for every 2020 OCEANE, is being made pursuant to the French Offer Documentation available to holders of Alcatel Lucent Shares and OCEANEs located in France (holders of Alcatel Lucent Shares and OCEANEs located outside of France may not participate in the French Offer except if, pursuant to the local laws and regulations applicable to those holders, they are permitted to participate in the French Offer).

No fractional Nokia Shares or fractional Nokia ADSs will be issued. Holders of Alcatel Lucent Securities tendering into the U.S. Offer or the French Offer will receive cash in lieu of any fractional Nokia Shares or Nokia ADSs to which such holders may otherwise be entitled, following the implementation of a mechanism to resell such fractional Nokia Shares or Nokia ADSs.

Holders of options to acquire Alcatel Lucent Shares (“Alcatel Lucent Stock Options”) who wish to tender in the Exchange Offer or the subsequent offering period, if any, must exercise their Alcatel Lucent Stock Options, and Alcatel Lucent Shares must be issued to such holders prior to the Expiration Date (as defined below) or the expiration of the subsequent offering period, as applicable. Pursuant to the Memorandum of Understanding dated April 15, 2015 between Nokia and Alcatel Lucent, as amended on October 28, 2015 (the “Memorandum of Understanding”), Alcatel Lucent agreed to accelerate or waive certain terms of the Alcatel Lucent Stock Options, subject to certain conditions.

Restricted stock granted by Alcatel Lucent (“Alcatel Lucent Performance Shares”) cannot be tendered in the Exchange Offer or the subsequent offering period, if any, unless such Alcatel Lucent Performance Shares have vested and are transferable prior to the Expiration Date (as defined below) or the expiration of the subsequent offering period, as applicable. Pursuant to the Memorandum of Understanding, Nokia and Alcatel Lucent agreed to implement a mechanism with respect to unvested Performance Shares granted before April 15, 2015 pursuant to which the beneficiaries may waive their rights to receive Alcatel Lucent Performance Shares in exchange for Alcatel Lucent Shares, subject to certain conditions.

As a result of the matters described in “The Transaction—Reasons for the Alcatel Lucent Board of Directors’ Approval of the Transaction”, the participating members of the Alcatel Lucent board of directors, taking into account the factors described in that section, unanimously:

 

(i)

determined that the Exchange Offer is in the best interest of Alcatel Lucent, its employees and its stakeholders (including the holders of the Alcatel Lucent Shares and holders of other Alcatel Lucent Securities);

 

 

i

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(ii)

recommended that all holders of Alcatel Lucent Shares and holders of Alcatel Lucent ADSs tender their Alcatel Lucent Shares and/or their Alcatel Lucent ADSs pursuant to the Exchange Offer; and

 

(iii)

recommended that all holders of OCEANEs tender their OCEANEs pursuant to the Exchange Offer.

The U.S. Offer is being made on the terms and subject to the conditions set forth in “The Exchange Offer” section of this exchange offer/prospectus beginning on page 115 and the related forms of letters of transmittal.

THE U.S. OFFER AND WITHDRAWAL RIGHTS FOR TENDERS OF ALCATEL LUCENT SHARES AND OCEANEs IN THE U.S. OFFER WILL EXPIRE AT 11:00 A.M., NEW YORK CITY TIME (5:00 P.M. PARIS TIME), ON DECEMBER 23, 2015 (AS SUCH TIME AND DATE MAY BE EXTENDED, THE “EXPIRATION DATE”), UNLESS THE EXCHANGE OFFER IS EXTENDED.

THE DEADLINE FOR VALIDLY TENDERING AND WITHDRAWING ALCATEL LUCENT ADSs IN THE U.S. OFFER IS 5:00 P.M., NEW YORK CITY TIME ON THE U.S. BUSINESS DAY IMMEDIATELY PRECEDING THE EXPIRATION DATE, WHICH WILL BE DECEMBER 22, 2015 (AS SUCH TIME AND DATE MAY BE EXTENDED, THE “ADS TENDER DEADLINE”), UNLESS THE U.S. OFFER IS EXTENDED.

Nokia Shares are traded on NASDAQ OMX Helsinki Ltd. (the “Nasdaq Helsinki”) under the symbol “NOKIA” and Nokia ADSs are traded on the New York Stock Exchange (the “NYSE”) under the symbol “NOK.” On November 10, 2015, the most recent practicable trading day before the opening of the Exchange Offer, the closing price of Nokia Shares listed on the Nasdaq Helsinki was EUR 6.76 and the closing price of Nokia ADSs on the NYSE was USD 7.22.

Nokia has applied for the Nokia Shares (including the Nokia Shares to be issued in connection with the Exchange Offer) to be listed on Euronext Paris (the “Admission”). Nokia expects to request that Admission be approved to take effect prior to the Completion of the Exchange Offer. In addition, Nokia will apply for listing of the Nokia Shares and Nokia ADSs to be issued in connection with the Exchange Offer on the Nasdaq Helsinki and the NYSE, respectively.

Alcatel Lucent Shares are traded on Euronext Paris under the symbol “ALU” and Alcatel Lucent ADSs are traded on the NYSE under the symbol “ALU.” OCEANEs are traded on Euronext Paris, under the symbol “YALU” for the 2018 OCEANEs, “YALU1” for the 2019 OCEANEs and “YALU2” for the 2020 OCEANEs. On November 10, 2015, the closing price of Alcatel Lucent Shares on Euronext Paris was EUR 3.69 and the closing price of Alcatel Lucent ADSs on the NYSE was USD 3.94 and the latest reasonably available quotations for the OCEANEs was EUR 4.61 for the 2018 OCEANEs, EUR 4.74 for the 2019 OCEANEs and EUR 4.73 for the 2020 OCEANEs. As promptly as practicable following Completion of the Exchange Offer and subject to applicable law and Euronext Paris rules, Nokia intends to request Euronext Paris to delist the Alcatel Lucent Shares and OCEANEs from the regulated market of Euronext Paris. As promptly as practicable following Completion of the Exchange Offer, Nokia also intends to cause Alcatel Lucent to terminate the deposit agreement in respect of the Alcatel Lucent ADSs (the “Alcatel Lucent deposit agreement”), to seek to delist the Alcatel Lucent ADSs from the NYSE and, subject to applicable law, to deregister the Alcatel Lucent Shares and Alcatel Lucent ADSs and terminate the reporting obligations of Alcatel Lucent under the Exchange Act.

 

 

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SEE THE “RISK FACTORS” SECTION OF THIS EXCHANGE OFFER/PROSPECTUS BEGINNING ON PAGE 25 FOR A DISCUSSION OF IMPORTANT RISK FACTORS THAT YOU SHOULD CONSIDER BEFORE DECIDING WHETHER OR NOT TO TENDER YOUR ALCATEL LUCENT SECURITIES INTO THE U.S. OFFER.

Nokia has not authorized any person to provide any information or to make any representation in connection with the U.S. Offer other than the information contained or incorporated by reference in this exchange offer/prospectus, and if any person provides any of this information or makes any representation of this kind, that information or representation must not be relied upon as having been authorized by Nokia.

Nokia is not asking you for a proxy pursuant to this exchange offer/prospectus and you are requested not to send to Nokia a proxy in response hereto.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued in the transactions described in this exchange offer/prospectus or passed upon the adequacy or accuracy of this exchange offer/prospectus. Any representation to the contrary is a criminal offense.

 

 

The date of this exchange offer/prospectus is November 12, 2015.

 

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CERTAIN DEFINED TERMS

Unless otherwise specified or if the context so requires in this exchange offer/prospectus:

 

•

“Admission” refers to Nokia’s application for the Nokia Shares (including the Nokia Shares to be issued in connection with the Exchange Offer) to be listed on Euronext Paris.

 

•

“ADS Tender Deadline” refers to the deadline for validly tendering and withdrawing Alcatel Lucent ADSs in the U.S. Offer, set for 5:00 P.M., New York City time on the U.S. business day immediately preceding the Expiration Date, which will be December 22, 2015 (as such time and date may be extended).

 

•

“Alcatel Lucent” refers to Alcatel Lucent, a French société anonyme.

 

•

“Alcatel Lucent ADSs” refer to American depositary shares each representing one Alcatel Lucent Share.

 

•

“Alcatel Lucent 2014 Form 20-F” refers to Alcatel Lucent’s Annual Report on Form 20-F for the year ended December 31, 2014 filed with the SEC on March 24, 2015.

 

•

“Alcatel Lucent Securities” refer to the Alcatel Lucent Shares, the Alcatel Lucent ADSs and the OCEANEs.

 

•

“Alcatel Lucent Shares” refer to ordinary shares, nominal value EUR 0.05 per share of Alcatel Lucent.

 

•

“Alcatel Lucent Stock Options” refer to options to acquire Alcatel Lucent Shares.

 

•

“Alcatel Lucent Performance Shares” refer to restricted stock granted by Alcatel Lucent.

 

•

“AMF” refers to the French stock market authority (Autorité des marchés financiers).

 

•

“AMF General Regulation” refers to Article 236-3 of the General Regulation (Règlement général) published by the AMF.

 

•

“ATOP System” refers to the automated tender system of DTC.

 

•

“Completion of the Exchange Offer,” “completion of the U.S. Offer,” “completion of the French Offer” or “completion of the subsequent offering period” refer to settlement and delivery of the Nokia Shares to the holders of Alcatel Lucent Securities in accordance with the terms of the Exchange Offer and Conditions after announcement of the successful results of the French Offer by the AMF (taking into account the results of the U.S. Offer) or the results of the subsequent offering period, as applicable.

 

•

“Conditions” refer collectively to the Minimum Tender Condition and the Nokia Shareholder Approval.

 

•

“Convertible Bond” refers to Nokia’s EUR 750 million convertible bond issued in October 2012 and maturing in 2017.

 

•

“DTC” refers to The Depository Trust Company, the U.S. clearing and settlement system for equity securities.

 

•

“Exchange Offer” refers collectively to the U.S. Offer and the French Offer.

 

•

“Expiration Date” refers to the expiration date of the the U.S. Offer and withdrawal rights for tenders of Alcatel Lucent Shares and OCEANEs in the U.S. Offer, set for 11:00 A.M., New York City time (5:00 P.M. Paris time), on December 23, 2015 (as such time and date may be extended).

 

•

“French business day” refers to any day, other than a Saturday, Sunday or French public holiday.

 

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•

“French Offer” refers to Nokia’s exchange offer in France to exchange 0.5500 Nokia Share for every Alcatel Lucent Share, 0.6930 Nokia Share for every 2018 OCEANE, 0.7040 Nokia Share for every 2019 OCEANE and 0.7040 Nokia Share for every 2020 OCEANE, made pursuant to separate French Offer Documentation.

 

•

“French trading day” refers to any day on which Euronext Paris is generally open for business.

 

•

“French Offer Documentation” refers to the French Offer documentation filed with the AMF by Nokia.

 

•

“IFRS” refers to the International Financial Reporting Standards as issued by the International Accounting Standards Board.

 

•

“Mandatory Minimum Acceptance Threshold” refers to a number of Alcatel Lucent Shares representing more than 50% of the Alcatel Lucent share capital or voting rights, taking into account, if necessary, the Alcatel Lucent Shares resulting from the conversion of the OCEANEs validly tendered into the Exchange Offer. Refer to “The Exchange Offer—Terms of the Exchange Offer—Conditions to the Exchange Offer” for a description of how the Mandatory Minimum Acceptance Threshold is calculated.

 

•

“Memorandum of Understanding” refers to the Memorandum of Understanding dated April 15, 2015, as amended on October 28, 2015, between Nokia and Alcatel Lucent.

 

•

“Minimum Tender Condition” refers to the number of Alcatel Lucent Securities validly tendered in accordance with the terms of the Exchange Offer representing, on the date of announcement by the AMF of the results of the French Offer taking into account the results of the U.S. Offer, more than 50% of the Alcatel Lucent Shares on a fully diluted basis.

 

•

“MoU Business Day” refers to any day on which banking institutions are open for regular business in Finland, France and the United States which is not a Saturday, a Sunday or a public holiday.

 

•

“Nasdaq Helsinki” refers to NASDAQ OMX Helsinki Ltd.

 

•

“Nokia,” the “company,” “we,” “us” or “our” refers to Nokia Corporation, a Finnish corporation.

 

•

“Nokia ADSs” refer to American depositary shares each representing one Nokia Share.

 

•

“Nokia depositary” refers to Citibank, N.A., the depositary for the Nokia ADSs pursuant to a deposit agreement.

 

•

“Nokia 2014 Form 20-F” refers to Nokia’s Annual Report on Form 20-F for the year ended December 31, 2014 filed with the SEC on March 19, 2015.

 

•

“Nokia Shareholder Approval” refers to Nokia shareholders having approved the authorization for the Nokia board of directors to issue such number of new Nokia Shares as may be necessary for delivering the Nokia Shares offered in consideration for the Alcatel Lucent Securities tendered into the Exchange Offer and for the Completion of the Exchange Offer.

 

•

“Nokia Shares” refer to shares of Nokia Corporation.

 

•

“NYSE” refers to the New York Stock Exchange.

 

•

“2018 OCEANEs” refer to EUR 628 946 424.00 Alcatel Lucent bonds convertible into new Alcatel Lucent Shares or exchangeable for existing Alcatel Lucent Shares due on July 1, 2018.

 

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•

“2019 OCEANEs” refer to EUR 688 425 000.00 Alcatel Lucent bonds convertible into new Alcatel Lucent Shares or exchangeable for existing Alcatel Lucent Shares due on January 30, 2019.

 

•

“2020 OCEANEs” refer to EUR 460 289 979.90 Alcatel Lucent bonds convertible into new Alcatel Lucent Shares or exchangeable for existing Alcatel Lucent Shares due on January 30, 2020.

 

•

“OCEANEs” refer to the 2018 OCEANEs, the 2019 OCEANEs and the 2020 OCEANEs.

 

•

“Schedule TO” refers to the tender offer statement on Schedule TO.

 

•

“U.S. business day” refers to any day, other than a Saturday, Sunday or U.S. federal holiday or a day on which banking institutions are required or authorized by law or executive order to be closed in New York, New York.

 

•

“U.S. exchange agent” refers to Citibank, N.A.

 

•

“U.S. Offer” refers to the exchange offer to be made in the United States.

 

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TABLE OF CONTENTS

 

QUESTIONS AND ANSWERS ABOUT THE EXCHANGE OFFER			xi
SUMMARY			1
The Companies			1
Summary of the Terms of the Exchange Offer			3
Treatment of Alcatel Lucent Stock Options and Performance Shares			7
Reasons for the Exchange Offer			7
Integration and Reorganization			9
Squeeze-Out			9
Alcatel Lucent Board of Directors’ Approval of the Memorandum of Understanding			10
Alcatel Lucent Board of Directors’ Recommendation			10
Opinion of Alcatel Lucent’s Financial Advisor			11
Risk Factors			11
Nokia Shareholder Meeting			11
Trading in Alcatel Lucent Securities During and After the Exchange Offer Period			12
Accounting Treatment			12
No Appraisal Rights			12
Tax Considerations			12
Interests of Executive Officers and Directors of Alcatel Lucent in the Exchange Offer			13
Certain Relationships with Alcatel Lucent and Interests of Nokia in the Exchange Offer			13
Comparison of Rights of Holders of Nokia Shares and Alcatel Lucent Shares			13
Securities Prices			14
Regulatory Approvals for the Exchange Offer			14
No Solicitation of Alternate Proposals			14
Change in Alcatel Lucent Board Recommendation			14
Change in Nokia Board Recommendation			14
Termination of the Memorandum of Understanding			15
Termination Fees			15
COMPARATIVE DATA			17
SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION			19
Selected Historical Consolidated Financial Information for Nokia			19
Selected Historical Consolidated Financial Information for Alcatel Lucent			20
SELECTED UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION			22
RISK FACTORS			25
Risk Factors Relating to the Exchange Offer and the Squeeze-out			25
Risk Factors Relating to Nokia’s Business and Financing			34
Risk Factors Relating to Alcatel Lucent’s Business			35
Risk Factors Relating to the Proposed Sale of our HERE business			36
INDICATIVE TIMETABLE			37
THE TRANSACTION			38
Background of the Exchange Offer			38
Disclosure of Certain Information Relating to Alcatel Lucent			49
Reasons for the Exchange Offer			49
Reasons for the Alcatel Lucent Board of Directors’ Approval of the Transaction			51
Intent to Tender			76
Opinions of Alcatel Lucent’s Financial Advisor			77
Report of the Independent Financial Expert			93
Nokia Shareholder Meeting			93
Intentions of Nokia over the next twelve months			96
THE MEMORANDUM OF UNDERSTANDING			106
The Exchange Offer			106
Additional Exchange Mechanisms			106

 

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Representations and Warranties			106
French Group Committee Consultation			107
Consents and Approvals			107
Conduct of the Business Pending the Exchange Offer			107
Nokia Shareholder Meeting			108
No Solicitation of Alternate Proposals			108
Change in Alcatel Lucent Board Recommendation			110
Nokia Board Recommendation			111
Change in Nokia Board Recommendation			111
Indemnification and D&O Insurance			112
Conditions to the Filing of the French Offer			112
Termination of the Memorandum of Understanding			113
Termination Fees			114
Standstill			114
Exchange Ratio Adjustment Mechanism			114
THE EXCHANGE OFFER			116
Terms of the Exchange Offer			116
Procedure for Tendering			124
Validity of Tenders			131
Announcement of Results			131
Settlement and Delivery of Securities			131
Treatment of Fractional Nokia Shares or Nokia ADSs			132
Share Issuance and Power of Attorney			133
Representations and Covenants of Tendering Holders			134
Certain Consequences of the Exchange Offer			138
Accounting Treatment			143
No Appraisal Rights			143
Fees and Expenses			143
Statutory Exemption from Certain U.S. Tender Offer Requirements			144
Matters Relevant for OCEANEs Holders			144
Legal Matters; Regulatory Approvals			148
Certain Relationships with Alcatel Lucent and Interests of Nokia in the Exchange Offer			151
Interests of Executive Officers and Directors of Alcatel Lucent in the Exchange Offer			152
Treatment of Alcatel Lucent Stock Options and Performance Shares			152
FINANCIAL ANALYSIS OF THE EXCHANGE OFFER			157
Valuation Criteria for the Exchange Ratio			157
TAX CONSIDERATIONS			173
France Income Tax Consequences			173
United States Federal Income Tax Consequences			173
U.S. Federal Income Tax Consequences of Ownership of Nokia Securities			178
Finland			179
Finnish Income Tax Consequences of Ownership and Disposal of Nokia Securities			180
Finnish Transfer Tax			181
THE COMPANIES			182
Nokia			182
Alcatel Lucent			189
Organizational Structure			193
DESCRIPTION OF THE NOKIA SHARES AND ARTICLES OF ASSOCIATION			194
Shares and Share Capital of Nokia			194
Legislation Under Which Nokia Shares will be Issued			194
Summary of the Articles of Association of Nokia			195
Purchase Obligation			196
Overview of the Finnish Securities Market			198
The Finnish Book-Entry Securities System			200

 

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DESCRIPTION OF THE NOKIA AMERICAN DEPOSITARY SHARES			203
Dividends and Distributions			204
Distributions of Cash			204
Distributions of Shares			204
Distributions of Rights			204
Other Distributions			205
Changes Affecting Nokia Shares			205
Issuance of Nokia ADSs upon Deposit of Nokia Shares			205
Transfer, Combination and Split Up of ADRs			206
Withdrawal of Shares Upon Cancellation of Nokia ADSs			206
Voting Rights			207
Disclosure of Interests			207
Fees and Charges			208
Amendments and Termination			209
Books of Depositary			209
Limitations on Obligations and Liabilities			210
Pre-Release Transactions			210
Taxes			210
Foreign Currency Conversion			211
Information Relating to the Nokia Depositary			211
COMPARISON OF RIGHTS OF HOLDERS OF NOKIA SHARES AND ALCATEL LUCENT SHARES			212
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS			247
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION			249
VALIDITY OF NOKIA SHARES			269
EXPERTS			269
ENFORCEABILITY OF CIVIL LIABILITIES			269
WHERE YOU CAN FIND MORE INFORMATION			269
ANNEX A			A-1
ANNEX B-I			B-I-1
ANNEX B-II			B-II-1

 

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Nokia Shares are listed and traded on the Nasdaq Helsinki and Nokia ADSs are listed and traded on the NYSE and are registered under the Exchange Act. Alcatel Lucent Shares and OCEANEs are listed and traded on Euronext Paris and Alcatel Lucent ADSs are listed and traded on the NYSE and are registered under the Exchange Act. Accordingly, the Exchange Offer, insofar as it relates to the Alcatel Lucent Shares, OCEANEs and Alcatel Lucent ADSs, and the related issuance of Nokia Shares are subject to the rules and regulations of the United States, France and Finland. Some of the information contained in this exchange offer/prospectus is included because it is required to be included in the French Offer Documentation or in the Finnish prospectus. Some of that information has been prepared in accordance with French or Finnish format and style, which differs from the U.S. format and style for documents of this type.

This exchange offer/prospectus incorporates by reference important business and financial information about Nokia and Alcatel Lucent that is contained in their respective filings with the SEC but which is not included in, or delivered with, this exchange offer/prospectus. This information is available on the SEC’s website at www.sec.gov and from other sources. For more information about how to obtain copies of these documents, see the “Where You Can Find More Information” section of this exchange offer/prospectus. Nokia will also make copies of this information available to you without charge upon your written or oral request to Georgeson Inc. at (800) 314-4549. In order to receive timely delivery of these documents, holders of Alcatel Lucent Shares and OCEANEs must make such a request no later than five U.S. business days before the then-scheduled Expiration Date and holders of Alcatel Lucent ADSs must make such a request no later than five U.S. business days before the then-scheduled ADS Tender Deadline. The Expiration Date is currently December 23, 2015 and the ADS Tender Deadline is currently December 22, 2015 but the actual deadlines will be different if the U.S. Offer is extended.

 

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QUESTIONS AND ANSWERS ABOUT THE EXCHANGE OFFER

Below are some of the questions that you as a holder of Alcatel Lucent Securities may have regarding the Exchange Offer and answers to those questions. The answers to these questions do not contain all information relevant to your decision whether to tender your Alcatel Lucent Securities. To better understand the Exchange Offer, Nokia (also referred to as “we,” “us,” or “our”) urges you to read carefully the remainder of this exchange offer/prospectus and the accompanying letters of transmittal.

Why am I receiving this exchange offer/prospectus?

Nokia, a Finnish corporation, is offering, upon the terms and subject to the Conditions set forth in this exchange offer/prospectus and the French Offer Documentation, to acquire all of the Alcatel Lucent Securities through the Exchange Offer whereby Alcatel Lucent Securities will be exchanged for Nokia Shares or Nokia ADSs, as described below. The Exchange Offer is comprised of the U.S. Offer and the French Offer. The U.S. Offer is being made pursuant to this exchange offer/prospectus to all U.S. holders of outstanding Alcatel Lucent Shares, all U.S. holders of outstanding OCEANEs and all holders of outstanding Alcatel Lucent ADSs, wherever located. Holders of Alcatel Lucent ADSs located outside of the United States may participate in the U.S. Offer only to the extent the local laws and regulations applicable to those holders permit them to participate in the U.S. Offer. Holders of Alcatel Lucent Securities who are restricted from participating in the U.S. Offer pursuant to the Sanctions may not participate in the U.S. Offer.

What is the purpose of the Exchange Offer?

The purpose of the Exchange Offer is for Nokia to acquire all of the Alcatel Lucent Securities in order to combine the businesses of Nokia and Alcatel Lucent.

What will I receive if the Exchange Offer is completed?

Following the Completion of the Exchange Offer, you will receive:

 

•

0.5500 Nokia Share for every Alcatel Lucent Share you validly tender into, and do not withdraw from, the U.S. Offer,

 

•

0.5500 Nokia ADS for every Alcatel Lucent ADS you validly tender into, and do not withdraw from, the U.S. Offer, and

 

•

0.6930 Nokia Share for every 2018 OCEANE, 0.7040 Nokia Share for every 2019 OCEANE and 0.7040 Nokia Share for every 2020 OCEANE you validly tender into, and do not withdraw from, the U.S. Offer.

The French Offer comprises an offer to exchange 0.5500 Nokia Share for every Alcatel Lucent Share, 0.6930 Nokia Share for every 2018 OCEANE, 0.7040 Nokia Share for every 2019 OCEANE and 0.7040 Nokia Share for every 2020 OCEANE, made pursuant to separate French Offer Documentation available to holders of Alcatel Lucent Shares and OCEANEs located in France (holders of Alcatel Lucent Shares and OCEANEs located outside of France may not participate in the French Offer except if, pursuant to the local laws and regulations applicable to those holders, they are permitted to participate in the French Offer).

No fractional Nokia Shares or fractional Nokia ADSs will be issued. Holders of Alcatel Lucent Securities tendering into the U.S. Offer or the French Offer will receive cash in lieu of any fractional Nokia Shares or Nokia ADSs to which such holders may otherwise be entitled, following the implementation of a mechanism to resell such fractional Nokia Shares or Nokia ADSs.

 

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What options are available to the holders of the OCEANEs in connection with the Exchange Offer?

In connection with the Exchange Offer, holders of the OCEANEs may elect to take any of the following steps with respect to their OCEANEs:

 

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Tender the OCEANEs into the Exchange Offer. The Exchange Offer is being made to all holders of the OCEANEs issued and outstanding and such holders may accept the Exchange Offer by tendering their OCEANEs into the U.S. Offer or the French Offer, as applicable. For every 2018 OCEANE you validly tender into, and do not withdraw from, the U.S. Offer, you will receive 0.6930 Nokia Share, for every 2019 OCEANE you validly tender into, and do not withdraw from, the U.S. Offer, you will receive 0.7040 Nokia Share and for every 2020 OCEANE you validly tender into, and do not withdraw from, the U.S. Offer, you will receive 0.7040 Nokia Share.

 

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Convert the OCEANEs into or exchange the OCEANEs for Alcatel Lucent Shares at the change of control conversion/exchange ratio. Prior to the opening of the Exchange Offer the conversion/exchange ratio was 1.06 Alcatel Lucent Share for every 2018 OCEANE, 1.00 Alcatel Lucent Share for every 2019 OCEANE and 1.00 Alcatel Lucent Share for every 2020 OCEANE. The opening of the Exchange Offer has resulted in a temporary adjustment to the conversion/exchange ratios applicable to each series of OCEANEs. The adjusted conversion/exchange ratios resulting from the Exchange Offer are 1.26 Alcatel Lucent Shares for every 2018 OCEANE, 1.28 Alcatel Lucent Share for every 2019 OCEANE and 1.28 Alcatel Lucent Share for every 2020 OCEANE. The right of OCEANEs holders to obtain Alcatel Lucent Shares on the basis of the adjusted conversion/exchange ratios will expire, (x) if the AMF declares that the French Offer is successful, on the date that is 15 French business days after the publication by the AMF of the results of the French Offer (taking into account the results of the U.S. Offer), which is currently expected to be approximately seven and in no event later than nine French trading days following the Expiration Date, or, if there is a subsequent offering period, the date that is 15 French business days after the end of the subsequent offering period of the French Offer; (y) if the AMF declares that the French Offer (taking into account the results of the U.S. Offer) is unsuccessful, the date of publication by the AMF of the result of the French Offer; or (z) if Nokia withdraws the Exchange Offer, the date on which such withdrawal is published. If the holders of the OCEANEs choose to convert their OCEANEs into or exchange their OCEANEs for Alcatel Lucent Shares, they may then be able to tender such Alcatel Lucent Shares into the Exchange Offer in accordance with its terms and Conditions.

 

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After the Completion of the Exchange Offer, request an early redemption of their OCEANEs. If the Exchange Offer is successful (resulting in a change of control of Alcatel Lucent under the terms of the OCEANEs), each holder of the OCEANEs who did not tender their OCEANEs into the Exchange Offer may request that Alcatel Lucent redeem their OCEANEs for cash at par plus, as applicable, accrued interest from the last interest payment date for each series of the OCEANEs until the early redemption date.

 

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Early redemption decided by the general meeting of the holders of any series of OCEANEs. In the event the Alcatel Lucent Shares cease to be listed on Euronext Paris and are not listed on any other regulated market within the European Union within the meaning of the European Union Directive 2004/39/EC, and the Alcatel Lucent ADSs or the Alcatel Lucent Shares cease to be listed on a regulated market in the United States, the representative of the body for each type of OCEANE (le représentant de la masse) may, upon decision of the general meeting of the holders of such OCEANEs, other than Nokia if it holds more than 10% of the relevant series of OCEANEs, make all of such OCEANEs redeemable by Alcatel Lucent at a price in cash equal to par plus, as applicable, accrued interest from the last interest payment date for each of the OCEANEs until the early redemption date.

 

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In addition to the foregoing and in accordance with the terms of the OCEANEs, if the Exchange Offer is successful and subject to applicable law, Nokia reserves the right to cause Alcatel Lucent to redeem for cash at par value plus, as applicable, accrued interest, any series of the OCEANEs if less than 15% of the issued OCEANEs of any such series remain outstanding at any time.

Holders of OCEANEs that remain outstanding after the events described above will remain creditors of Alcatel Lucent with the ability to convert their OCEANEs into or exchange their OCEANEs for Alcatel Lucent Shares at the then applicable conversion/exchange ratio.

Holders of the 2018 OCEANEs who do not convert their 2018 OCEANEs into Alcatel Lucent Shares prior to December 31, 2015, the record date for the next interest payment with respect to the 2018 OCEANEs, are expected to be eligible to receive such interest payment on January 4, 2016, whether or not they tender their 2018 OCEANEs into the Exchange Offer.

As promptly as possible following Completion of the Exchange Offer and subject to applicable law and stock exchange rules, Nokia intends to request Euronext Paris to delist Alcatel Lucent Shares and OCEANEs from the regulated market of Euronext Paris and seek to delist Alcatel Lucent ADSs from the NYSE.

For the avoidance of doubt, Nokia does not intend to arrange for any of the OCEANEs to become convertible into Nokia convertible bonds whether as a part of the Exchange Offer or otherwise.

If OCEANEs are converted into or exchanged for Alcatel Lucent Shares during the Exchange Offer and the Exchange Offer is unsuccessful, will former holders of OCEANEs have to surrender their Alcatel Lucent Shares?

No. After conversion/exchange has taken place, the OCEANEs are no longer outstanding and the relevant Alcatel Lucent Shares will not have to be surrendered if the Exchange Offer is not successful.

Can holders of Alcatel Lucent Stock Options and Performance Shares participate in the Exchange Offer?

Holders of options to acquire Alcatel Lucent Shares who wish to tender into the Exchange Offer or the subsequent offering period, if any, must exercise their Alcatel Lucent Stock Options, and Alcatel Lucent Shares must be issued to such holders prior to the Expiration Date or the expiration of the subsequent offering period, as applicable.

Pursuant to the Memorandum of Understanding, Alcatel Lucent agreed to accelerate or waive certain terms of the Alcatel Lucent Stock Options, subject to certain conditions.

Alcatel Lucent Performance Shares granted by Alcatel Lucent cannot be tendered in the Exchange Offer or the subsequent offering period, if any, unless such Alcatel Lucent Performance Shares have vested and are transferable prior to the Expiration Date or the expiration of the subsequent offering period, as applicable.

Pursuant to the Memorandum of Understanding, Nokia and Alcatel Lucent agreed to implement a mechanism with respect to unvested Performance Shares granted before April 15, 2015 pursuant to which the beneficiaries may waive their rights to receive Performance Shares in exchange for Alcatel Lucent Shares, subject to certain conditions.

What percentage of Nokia will holders of Alcatel Lucent Securities own after the Exchange Offer?

After Completion of the Exchange Offer and assuming that all Alcatel Lucent Securities are tendered into the Exchange Offer or the subsequent offering period, if any, former holders of Alcatel Lucent

 

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Securities are expected to own approximately 33.5% of the issued and outstanding Nokia Shares on a fully diluted basis (based on the number of shares outstanding on December 31, 2014).

What are the benefits of a combination of Nokia and Alcatel Lucent?

We believe that the combination of Nokia’s and Alcatel Lucent’s businesses will create significant value for stakeholders of both companies. Following the Completion of the Exchange Offer, Nokia will be well-positioned to create the foundation of seamless connectivity for people and things wherever they are. We believe that this foundation is essential for enabling the next wave of technological change, including the “internet of things” and transition to the cloud.

The strategic rationale for combining the two companies includes:

 

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creation of end-to-end portfolio scope and scale player with leading global positions across products, software and services to meet changing industry paradigms;

 

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complementary offerings, customers and geographic footprint;

 

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enhanced research and development capabilities creating an innovation powerhouse with significant combined R&D resources;

 

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the recent execution track-record on both sides and common vision for the future;

 

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the opportunity to realize significant cost savings and other synergies; and

 

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the development of a robust capital structure and strong balance sheet.

Does Alcatel Lucent support the Exchange Offer?

Yes. At their meeting of October 28, 2015 and as a result of the matters described in the section entitled “The Transaction—Reasons for the Alcatel Lucent Board of Directors’ Approval of the Transaction”, the participating members of the Alcatel Lucent board of directors, taking into account the factors described in that section, unanimously:

 

(i)

determined that the Exchange Offer is in the best interest of Alcatel Lucent, its employees and its stakeholders (including the holders of the Alcatel Lucent Shares and holders of other Alcatel Lucent Securities);

 

(ii)

recommended that all holders of Alcatel Lucent Shares and holders of Alcatel Lucent ADSs tender their Alcatel Lucent Shares and/or their Alcatel Lucent ADSs pursuant to the Exchange Offer; and

 

(iii)

recommended that all holders of OCEANEs tender their OCEANEs pursuant to the Exchange Offer.

What is the market value of my Alcatel Lucent Securities as of a recent date?

On November 10, 2015, the most recent practicable trading day before the opening of the Exchange Offer, the closing price of an Alcatel Lucent Share on Euronext Paris was EUR 3.69, the closing price of an Alcatel Lucent ADS on the NYSE was USD 3.94, the last reasonably available quotation of a 2018 OCEANE was EUR 4.61, the last reasonably available quotation of a 2019 OCEANE was EUR 4.74 and the last reasonably available quotation of a 2020 OCEANE was EUR 4.73. Please obtain a recent quotation for your Alcatel Lucent Securities prior to deciding whether or not to tender.

 

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What is the expected governance structure of the combined company?

It is proposed that following the Completion of the Exchange Offer, Nokia’s corporate governance structure will include the following:

 

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Chairman of the board of directors: Risto Siilasmaa;

 

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President and Chief Executive Officer: Rajeev Suri;

 

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Nokia’s board of directors having ten members, including Louis R. Hughes, Jean C. Monty and Olivier Piou, who have been nominated jointly by the Corporate Governance & Nomination committee of the Nokia board of directors and by Alcatel Lucent. If elected, Olivier Piou is expected to serve as Vice Chairman of Nokia; and

 

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Leadership built on strengths of both Nokia and Alcatel Lucent.

Appointment of members of the Nokia board of directors is subject to approval by Nokia shareholders.

What are the Conditions to the U.S. Offer?

Nokia’s obligation to accept, and to exchange, any Alcatel Lucent Securities validly tendered into the U.S. Offer is subject only to:

 

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the Minimum Tender Condition; and

 

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the Nokia Shareholder Approval.

Subject to applicable SEC and AMF rules and regulations, Nokia reserves the right, in its sole discretion, to waive the Minimum Tender Condition to any level at or above the Mandatory Minimum Acceptance Threshold.

How does the Nokia shareholders’ vote impact the deal?

Nokia’s obligation to accept, and to exchange, any Alcatel Lucent Securities validly tendered into the Exchange Offer will be subject to, among other Conditions, the Nokia Shareholder Approval.

Nokia’s extraordinary general meeting of shareholders has been convened for December 2, 2015 to consider and vote on the resolution contemplated by the Nokia Shareholder Approval. Proxy materials for such meeting were separately distributed by Nokia prior to the date of this exchange offer/prospectus. The resolution must be approved by shareholders representing at least two-thirds of the votes cast and Nokia Shares represented at such extraordinary general meeting of Nokia’s shareholders.

What happens if less than 100% of Alcatel Lucent Securities have been purchased following the Completion of the Exchange Offer or the subsequent offering period, if any?

If, at the Completion of the Exchange Offer or the subsequent offering period, if any, Nokia owns 95% or more of the share capital and voting rights of Alcatel Lucent (Alcatel Lucent Shares held in treasury being considered as held by Nokia for the purpose of the calculation), Nokia intends to request from the AMF, within three months of the expiration of the French Offer period or the subsequent offering period, if any, the implementation of a squeeze-out for the remaining outstanding Alcatel Lucent Shares for cash consideration. In addition, if, at the Completion of the Exchange Offer or the subsequent offering period, if any, Nokia owns 95% or more of the sum of the outstanding Alcatel Lucent Shares and the Alcatel Lucent Shares issuable upon conversion of all of the OCEANEs then outstanding (Alcatel Lucent Shares held in treasury being considered as held by Nokia for the purpose of the calculation), Nokia intends to request from the AMF, within three months of the expiration of the French Offer period or the subsequent offering period, if any, the implementation of a squeeze-out for the remaining OCEANEs for cash consideration.

 

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In accordance with French law and the AMF General Regulation, in such a squeeze-out, Nokia intends, prior to the implementation of the squeeze-out for cash consideration, to propose to the holders of Alcatel Lucent Securities as an alternative to cash consideration, an option to exchange their Alcatel Lucent Securities for Nokia Shares and/or Nokia ADSs, as applicable, at the same exchange ratios offered in the context of the Exchange Offer (the “Exchange Option”). The holders of Alcatel Lucent Securities may opt for the Exchange Option for all or part of their Alcatel Lucent Securities within a time period to be determined at a later date. The Alcatel Lucent Securities not tendered into the Exchange option will be subject to the squeeze-out for cash consideration.

If Nokia owns less than 95% of the share capital and voting rights of Alcatel Lucent immediately after the Completion of the subsequent offering period, then Nokia reserves the right, subject to applicable law, to (i) commence a buy-out offer for the Alcatel Lucent Securities it does not own on the relevant date pursuant to the AMF General Regulation if at any time thereafter it owns 95% or more of the voting rights of Alcatel Lucent; (ii) commence at any time a simplified offer for the Alcatel Lucent Securities it does not own on the relevant date pursuant to Article 233-1 et seq. of the AMF General Regulation; (iii) purchase Alcatel Lucent Securities on the market; (iv) cause Alcatel Lucent to be merged into Nokia or an affiliate thereof, contribute assets to, merge certain of its subsidiaries with, or undertake other reorganizations of, Alcatel Lucent; or (v) take any other steps to consolidate its ownership of Alcatel Lucent. We do not currently intend to structure any of the foregoing steps so that it would result in the OCEANEs becoming convertible bonds of Nokia Corporation, becoming debt obligations of Nokia Corporation or otherwise convertible into Nokia Shares or Nokia ADSs.

In addition, Nokia reserves the right, subject to applicable law, at any time after the Completion of the Exchange Offer or the subsequent offering period, as applicable, 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 2018 OCEANEs, 2019 OCEANEs or 2020 OCEANEs, if less than 15% of the issued OCEANEs of any such series remain outstanding.

Why is there a separate French Offer?

As Alcatel Lucent is a French société anonyme with a listing on Euronext Paris, a French Offer is required pursuant to French laws and regulations and is being conducted in accordance with French law and the AMF General Regulation.

What are the differences between the U.S. Offer and the French Offer?

The financial conditions of the U.S. Offer and the French Offer are the same. As a result of differences in law and market practice between the United States and France, however, the procedures for accepting the Exchange Offer and tendering Alcatel Lucent Securities, and some of the rights of tendering holders of Alcatel Lucent Securities, under the U.S. Offer and the French Offer, are not identical. The primary difference between the U.S. Offer and the French Offer is that the U.S. Offer is available to U.S. holders of Alcatel Lucent Shares and OCEANEs and to holders of Alcatel Lucent ADSs, wherever located, while the French Offer is available to holders of Alcatel Lucent Shares and OCEANEs located in France (holders of Alcatel Lucent Shares and OCEANEs located outside of France may not participate in the French Offer except if, pursuant to the local laws and regulations applicable to those holders, they are permitted to participate in the French Offer). Holders of Alcatel Lucent ADSs located outside of the United States may participate in the U.S. Offer only to the extent the local laws and regulations applicable to those holders permit them to participate in the U.S. Offer. Holders of Alcatel Lucent Securities who are restricted from participating in the U.S. Offer pursuant to the Sanctions may not participate in the U.S. Offer.

 

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How do I validly tender my Alcatel Lucent ADSs into the U.S. Offer?

The steps you must take to validly tender your Alcatel Lucent ADSs will depend on whether you hold your Alcatel Lucent ADSs directly or indirectly through a broker, dealer, commercial bank, trust company or other nominee.

 

•

If you hold Alcatel Lucent ADSs directly and would like to tender them into the Exchange Offer, you must tender them to the U.S. exchange agent prior to the ADS Tender Deadline, which is 5:00 P.M., New York time, on the U.S. business day immediately preceding the Expiration Date, which is December 22, 2015, unless the U.S. Offer is extended. In order to validly tender your directly-held Alcatel Lucent ADSs, you must take the following actions:

 

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if you hold your Alcatel Lucent ADSs in certificated form, you must complete and sign the letter of transmittal included with this exchange offer/prospectus and return it together with your Alcatel Lucent ADS certificates and any required documentation to the U.S. exchange agent at the appropriate address specified on the back cover page of this exchange offer/prospectus;

 

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if you hold your Alcatel Lucent ADSs in uncertificated form on the register of the Alcatel Lucent depositary (in direct registration form), you must complete and sign the letter of transmittal included with this exchange offer/prospectus and return it with any required documentation to the U.S. exchange agent at the appropriate address specified on the back cover page of this exchange offer/prospectus; and

 

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if you hold your Alcatel Lucent ADSs in book-entry form indirectly through DTC, you must tender your Alcatel Lucent ADSs to the U.S. exchange agent by using the ATOP system.

 

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If you hold your Alcatel Lucent ADSs indirectly through a broker, dealer, commercial bank, trust company or other nominee, you should not complete and sign the letter of transmittal included with this exchange offer/prospectus. Instead, you should instruct your broker, dealer, commercial bank, trust company or other nominee to validly tender your Alcatel Lucent ADSs to the U.S. exchange agent on your behalf.

The U.S. exchange agent has established an additional means for registered holders of uncertificated Alcatel Lucent ADSs to complete and deliver letters of transmittal via the internet, by signing onto a secure website established and maintained by the U.S. exchange agent and filling in the applicable information online. Detailed instructions for completing and delivering the letter of transmittal via the internet (including the applicable password) are set forth in the letter of transmittal being delivered to holders of uncertificated Alcatel Lucent ADSs together with this exchange offer/prospectus.

If your Alcatel Lucent ADSs are not immediately available, you may also follow the guaranteed delivery procedures described in this exchange offer/prospectus.

How do I validly tender my Alcatel Lucent Shares or OCEANEs into the U.S. Offer?

You do not need to complete a letter of transmittal to tender your Alcatel Lucent Shares or OCEANEs into the U.S. Offer.

If you hold Alcatel Lucent Shares or OCEANEs through a custodian that is not a French financial intermediary, your custodian should either forward to you the transmittal materials and instructions sent by the French financial intermediary that holds the Alcatel Lucent Shares or OCEANEs on behalf of the custodian as record owner or send you a separate form prepared by the custodian. If you have not yet received instructions from your custodian, please contact your custodian directly.

If you hold Alcatel Lucent Shares or OCEANEs through a French financial intermediary, your French financial intermediary should send you transmittal materials and instructions for accepting the U.S. Offer before the last day of the offer. If you have not yet received instructions from your French financial intermediary, please contact your French financial intermediary directly.

 

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If your Alcatel Lucent Shares or OCEANEs are held in pure registered form (nominatif pur), you must first request that your Alcatel Lucent Shares or OCEANEs be converted to administered registered form (nominatif administré) or to bearer form (au porteur).

How much time do I have to decide whether to tender?

You may tender your Alcatel Lucent Shares and OCEANEs into the U.S. Offer at any time prior to the Expiration Date (which is currently 11:00 A.M., New York City time (5:00 P.M. Paris time), on December 23, 2015, but will change if the U.S. Offer is extended). You may tender your Alcatel Lucent ADSs into the U.S. Offer at any time prior to the ADS Tender Deadline (which is currently 5:00 P.M., New York City time, on the U.S. business day immediately preceding the Expiration Date, which is currently December 22, 2015, unless the U.S. Offer is extended).

Can the Exchange Offer be extended?

Yes. Subject to the applicable rules and regulations of the AMF and the SEC, the Expiration Date and the ADS Tender Deadline may be extended.

Only the AMF has the authority to set or to extend the expiration date of the French Offer. If the French Offer is extended, the AMF will issue a notice of extension on its website http://www.amf-france.org. In addition, Nokia will post a notice of any extension of the French Offer or the U.S. Offer on its website www.nokia.com, and will issue a public announcement. The information on Nokia’s or the AMF’s website is not a part of this exchange offer/prospectus and is not incorporated by reference herein.

Pursuant to the Memorandum of Understanding, Nokia agreed to ensure that, subject to applicable law, the period during which the U.S. Offer is open corresponds to the period during which the French Offer is open (including any extensions or subsequent offering periods in relation to the French Offer), and Nokia expressly reserves the right to extend the U.S. Offer either to match any extension of the French Offer or otherwise. Furthermore, Nokia may be required by the U.S. federal securities laws (including Rule 14e-1 under the Exchange Act) to extend the duration of the U.S. Offer if Nokia makes a material change to the terms of the U.S. Offer.

Will there be a subsequent offering period?

Pursuant to the Memorandum of Understanding and according to the AMF General Regulation, (i) if at the Completion of the Exchange Offer, Nokia owns 95% or more of the share capital and voting rights of Alcatel Lucent (Alcatel Lucent Shares held in treasury being considered as held by Nokia for the purpose of the calculation), Nokia may open the subsequent offering period within ten French trading days of the announcement by the AMF of the results of the French Offer (taking into account the results of the U.S. Offer), unless Nokia files the request for a squeeze-out with the AMF within ten French trading days of the announcement by the AMF; or (ii) if at the Completion of the Exchange Offer Nokia owns more than 50% but less than 95% of Alcatel Lucent share capital and voting rights, Nokia agreed to conduct a subsequent offering period after the date of announcement of the results of the French Offer by the AMF (taking into account the results of the U.S. Offer) (subject to the satisfaction or waiver of the Minimum Tender Condition and the receipt of the Nokia Shareholder Approval). The subsequent offering period would be conducted on the same terms as the Exchange Offer, but the Alcatel Lucent Securities properly tendered during the subsequent offering period will not be permitted to be withdrawn and will be accepted without any minimum condition.

Can I withdraw Alcatel Lucent Securities that I have tendered into the U.S. Offer?

Yes. You may withdraw any Alcatel Lucent Shares and OCEANEs tendered into the U.S. Offer at any time prior to the Expiration Date, and you may withdraw any Alcatel Lucent ADSs tendered into the U.S. Offer at any time prior to the ADS Tender Deadline. In addition, in accordance with U.S. securities

 

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laws, you may generally withdraw your tendered Alcatel Lucent Securities tendered into the U.S. Offer if they have not been accepted for exchange within 60 days after the beginning of the offer period. However, these withdrawal rights will not be available following the Expiration Date, in the case of Alcatel Lucent Shares and OCEANEs, or the ADS Tender Deadline, in the case of Alcatel Lucent ADSs, and prior to the commencement of the subsequent offering period, if any. Also, subject to satisfaction of all Conditions other than the Minimum Tender Condition, these withdrawal rights will not be available during the period that the securities tendered into the Exchange Offer are being counted. Pursuant to Rule 14d-7(a)(2) under the Exchange Act, no withdrawal rights will apply to Alcatel Lucent Securities tendered during a subsequent offering period, if any.

How do I withdraw Alcatel Lucent Securities previously tendered into the U.S. Offer?

To withdraw previously tendered Alcatel Lucent ADSs, the U.S. exchange agent must receive a timely written or facsimile transmission notice of withdrawal. Any such notice must specify the name of the person who tendered the Alcatel Lucent ADSs being withdrawn, the number of Alcatel Lucent ADSs being withdrawn and the name of the registered holder if different from that of the person who tendered such Alcatel Lucent ADSs. To withdraw previously tendered Alcatel Lucent Shares or OCEANEs, you should contact your French or non-French financial intermediary or nominee through whom you tendered the Alcatel Lucent Shares or OCEANEs regarding their withdrawal procedures to validly withdraw tendered Alcatel Lucent Shares or OCEANEs in the U.S. Offer.

Will I have to pay any fees or commissions for tendering my Alcatel Lucent Securities?

If your Alcatel Lucent Securities are tendered into the U.S. Offer by your broker, dealer, commercial bank, trust company or other nominee, you will be responsible for any fees or commissions they may charge you in connection with such tender. No commission will be paid by Nokia to any intermediary of Alcatel Lucent Security holders or any person soliciting the contribution of Alcatel Lucent Securities into the Exchange Offer.

You will also be responsible for all governmental charges and taxes payable in connection with tendering your Alcatel Lucent Securities.

Will tendered Alcatel Lucent Securities be subject to proration?

No. Subject to the terms and Conditions, Nokia will acquire any and all Alcatel Lucent Securities validly tendered into, and not withdrawn from, the U.S. Offer.

Can I tender less than all the Alcatel Lucent Securities that I own into the Exchange Offer?

Yes. You may elect to tender all or a portion of the Alcatel Lucent Securities that you own into the U.S. Offer.

If I decide not to tender, how will the Exchange Offer affect my Alcatel Lucent Securities?

The Completion of the Exchange Offer is conditioned, among other things, upon the satisfaction or waiver of the Minimum Tender Condition.

If the Exchange Offer is successful, the acquisition by Nokia of Alcatel Lucent Securities in the Exchange Offer will reduce the number of Alcatel Lucent Securities that might otherwise trade publicly and may reduce the number of holders of Alcatel Lucent Securities, which could adversely affect the liquidity and market value of the Alcatel Lucent Securities not acquired in the Exchange Offer.

On opening of the first U.S. business day following the ADS Tender Deadline, the NYSE may suspend trading in the Alcatel Lucent ADSs pending public announcement of the results of the Exchange Offer.

 

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Because the AMF may not announce the results of the French Offer (taking into account the results of the U.S. Offer) until up to nine French trading days after the Expiration Date (although we expect the announcement to be made approximately seven French trading days after the Expiration Date), holders of Alcatel Lucent ADSs who do not tender their Alcatel Lucent ADSs in the U.S. Offer may be unable to trade Alcatel Lucent ADSs on the NYSE during this period. Further, if fewer than 600 000 Alcatel Lucent ADSs would remain outstanding following Completion of the Exchange Offer, the NYSE may not resume trading in the Alcatel Lucent ADSs even after the publication of the results of the Exchange Offer. Holders of Alcatel Lucent ADSs who do not tender their Alcatel Lucent ADSs in the Exchange Offer may therefore be unable to trade their Alcatel Lucent ADSs on the NYSE at any point following the Expiration Date.

As promptly as practicable following Completion of the Exchange Offer and subject to applicable law and Euronext Paris rules, Nokia intends to request Euronext Paris to delist the Alcatel Lucent Shares and OCEANEs from the regulated market of Euronext Paris. Nokia also intends to seek to delist the Alcatel Lucent ADSs from the NYSE and, subject to applicable law, to deregister the Alcatel Lucent Shares and Alcatel Lucent ADSs and terminate the reporting obligations of Alcatel Lucent under the Exchange Act.

Will I have appraisal rights in connection with the Exchange Offer?

No. There are no appraisal or similar rights available to holders of Alcatel Lucent Securities in connection with the Exchange Offer.

What are the tax consequences if I participate or do not participate in the Exchange Offer?

For information on certain French, Finnish, and U.S. tax consequences of the Exchange Offer, see the “Tax Considerations” section of this exchange offer/prospectus. You should consult your own tax advisor on the tax consequences to you of tendering your Alcatel Lucent Securities in the Exchange Offer.

How and where will the outcome of the Exchange Offer be announced?

The AMF is expected to announce the results of the French Offer taking into account the results of the U.S. Offer approximately seven and in any event no later than nine French trading days following the Expiration Date and, if applicable, the ending of the subsequent offering period. In addition, Nokia will post a notice of the results of the Exchange Offer on www.nokia.com, and will issue a public announcement. The information on Nokia’s website is not a part of this exchange offer/prospectus and is not incorporated by reference herein.

When will I receive my Nokia Shares or Nokia ADSs?

You will receive the Nokia Shares or Nokia ADSs you are entitled to receive pursuant to the U.S. Offer approximately five French trading days following the announcement of the results of the French Offer (taking into account the results of the U.S. Offer) by the AMF and, if applicable, of the subsequent offering period. If the Exchange Offer expires and the Conditions are not satisfied or terminated in accordance with applicable law, the U.S. exchange agent will return tendered Alcatel Lucent ADSs to you within one U.S. business day after the expiration or termination of the U.S. Offer, and the tendered Alcatel Lucent Shares or OCEANEs will be returned to you within three U.S. business days after the expiration or termination of the U.S. Offer.

Who can I call with questions?

If you have more questions about the Exchange Offer, you should contact Nokia’s information agent, Georgeson Inc., toll-free at (800) 314-4549.

 

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PRESENTATION OF INFORMATION

Currency and Exchange Rates

In this exchange offer/prospectus, all references to “U.S. dollar,” “USD” and “$” are to the lawful currency of the United States. All references to “euro,” “EUR” and “€” are to the official currency of the member states of the European Union (the “EU”) that adopted the single currency in accordance with the Treaty Establishing the European Economic Community (signed in Rome on March 25, 1957), as amended by the Treaty of European Union signed in Maastricht on February 7, 1992.

The following tables set forth, for the periods indicated, information concerning the exchange rates between the euro and the U.S. dollar based on the noon buying rate for cable transfers as certified by the Federal Reserve Board of New York. Such rates are provided solely for your convenience and are not necessarily the rates used by Alcatel Lucent or Nokia in the preparation of their financial statements or otherwise.

 

		Average ($)				High ($)				Low ($)				Period End ($)
Year ended December 31, 2010			1.3216				1.4536				1.1959				1.3269
Year ended December 31, 2011			1.4002				1.4875				1.2926				1.2973
Year ended December 31, 2012			1.2909				1.3463				1.2062				1.3186
Year ended December 31, 2013			1.3303				1.3816				1.2774				1.3779
Year ended December 31, 2014			1.3210				1.3927				1.2101				1.2101
Six months ended June 30, 2015			1.1090				1.2015				1.0524				1.1154

 

		High ($)				Low ($)
May 2015			1.1428				1.0876
June 2015			1.1404				1.0913
July 2015			1.1150				1.0848
August 2015			1.1580				1.0868
September 2015			1.1358				1.1104
October 2015			1.1437				1.0963
November 2015 (through November 6, 2015)			1.1026				1.0746

Solely for convenience, this exchange offer/prospectus contains translations of certain euro balances into U.S. dollars at specified rates. These are simply translations, and you should not expect that a euro amount actually represents a stated U.S. dollar amount or that it could be converted into U.S. dollars at specified rates or at all.

Other Information

Within this exchange offer/prospectus, references to the Exchange Offer, the U.S. Offer or the French Offer refer to such offer without any subsequent offering period, unless stated otherwise.

 

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RISK FACTORS

An investment in Nokia Shares or Nokia ADSs involves risks, some (but not all) of which are related to the Exchange Offer. In considering whether or not to tender your Alcatel Lucent Securities in the U.S. Offer, you should carefully consider the information set forth under this section of this exchange offer/prospectus, the risk factors contained in the Alcatel Lucent 2014 Form 20-F (which is incorporated by reference into this exchange offer/prospectus), the risk factors contained in the Nokia 2014 Form 20-F (which is incorporated by reference into this exchange offer/prospectus) and the other information included or incorporated by reference into this exchange offer/prospectus. Each of the matters described in these risk factors could have a material adverse effect on the businesses, financial condition and/or results of operations of Nokia and Alcatel Lucent (together with their respective subsidiaries) individually or as a combined company and on the market price of the Nokia Shares, the Nokia ADSs and the Alcatel Lucent Securities.

Risk Factors Relating to the Exchange Offer and the Squeeze-out

The exchange ratio of the Exchange Offer is fixed and will not be adjusted in case of any changes in the price of the relevant securities. Because the market price of Nokia Shares and Nokia ADSs fluctuates, holders of Alcatel Lucent Securities cannot be certain of the market value of the Nokia Shares or Nokia ADSs that will be issued in connection with the Exchange Offer.

Following the Completion of the Exchange Offer, you will receive (i) 0.5500 Nokia Share for every Alcatel Lucent Share you validly tender into the Exchange Offer, (ii) 0.5500 Nokia ADS for every Alcatel Lucent ADS you validly tender into the Exchange Offer and (iii) 0.6930 Nokia Share for every 2018 OCEANE, 0.7040 Nokia Share for every 2019 OCEANE and 0.7040 Nokia Share for every 2020 OCEANE you validly tender into the Exchange Offer. These exchange ratios are fixed and will not be adjusted in case of any changes in the price of Nokia Shares, Nokia ADSs or Alcatel Lucent Securities. If the price of Nokia Shares or Nokia ADSs decreases, which may occur as the result of a number of reasons (many of which are out of our control), including as a result of the risks described herein, holders of Alcatel Lucent Securities will receive less value for their Alcatel Lucent Securities than the value calculated pursuant to the exchange ratio on the date the Exchange Offer was announced. Because the Exchange Offer may not be completed until the Conditions have been satisfied or waived (please see “The Exchange Offer—Terms of the Exchange Offer—Conditions to the Exchange Offer”), a significant period of time may pass between the commencement of the Exchange Offer and the time that we accept Alcatel Lucent Securities for exchange. Therefore, at the time you tender your Alcatel Lucent Securities pursuant to the U.S. Offer, you will not know the exact market value of the Nokia Shares or Nokia ADSs that will be issued if we accept the Alcatel Lucent Securities for exchange. However, tendered Alcatel Lucent Securities may be withdrawn at any time prior to the time they are accepted for exchange pursuant to the Exchange Offer (except during any subsequent offering period or any period during which the tendered Alcatel Lucent Securities are being counted).

Holders of Alcatel Lucent Securities are urged to obtain current market quotations for Nokia Shares, Nokia ADSs and the relevant Alcatel Lucent Securities when they consider whether to tender their Alcatel Lucent Securities pursuant to the Exchange Offer.

The value of the Nokia Shares and the Nokia ADSs may decrease.

It is likely that the price of the Nokia Shares and the Nokia ADSs will fluctuate, even significantly from time to time, and may not always accurately reflect the value of Nokia and its subsidiaries. The value of the Nokia Shares and the Nokia ADSs may decrease. The prices that investors may realize for their holdings of Nokia Shares and Nokia ADSs, when they are able to do so, may be influenced by a large

 

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number of factors, including factors beyond our control. In addition, stock markets have in the recent past experienced extreme price and volume fluctuations, which, as well as general economic and political conditions, could have a material adverse effect on the market price of the Nokia Shares or the Nokia ADSs.

The issuance of Nokia Shares pursuant to the Exchange Offer could lead to the share price of Nokia Shares being adversely affected.

In connection with the Completion of the Exchange Offer, Nokia expects to issue approximately              Nokia Shares. The issuance of these new Nokia Shares could depress the market price of the existing Nokia Shares and Nokia ADSs.

Following the Exchange Offer, Nokia may be unable to successfully implement its business plans or successfully integrate Alcatel Lucent’s business or achieve the targeted synergies and other efficiencies.

Nokia and Alcatel Lucent currently operate as independent public companies. After the Exchange Offer, Nokia will be required to allocate significant resources, including management attention, to integrating Alcatel Lucent’s business and implementing its post-acquisition business plans. Achieving the anticipated benefits of the Alcatel Lucent acquisition will depend largely on the timely and efficient integration of the business operations of Nokia and Alcatel Lucent and our ability to successfully implement our post-acquisition business plans. The process of integrating Alcatel Lucent into Nokia’s existing business involves certain risks and uncertainties, and there can be no assurances that Nokia will be able to integrate the two businesses in the manner or within the timeframe currently anticipated. Potential challenges that Nokia may encounter during the integration process include the following:

 

•

the complexities associated with integrating Alcatel Lucent, while simultaneously continuing to provide Nokia’s high quality products and services on a consistent basis;

 

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the complexities of integrating Alcatel Lucent, which is a company with different products, services, markets and customers as well as conducting the business that includes areas that are new to Nokia;

 

•

the challenges relating to the consolidation of corporate, financial, control and administrative functions, including cash management, foreign exchange/hedging operations, internal and other financing, insurance, financial control and reporting, information technology, communications, compliance and other administrative functions;

 

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the challenges relating to the coordination of research and development, marketing and other support functions;

 

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the inability to retain or motivate key employees of the combined company and recruit needed resources;

 

•

disruptions caused for instance by company reorganizations triggered by the acquisition that may result in inefficiency in the organization, for instance there can be no assurance that Nokia will be able to successfully, smoothly or timely implement, the planned structure announced on October 7, 2015 or that the planned structure will result in the intended benefits;

 

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the inability to achieve the targeted organizational changes, efficiencies or synergies in the targeted time or extent or the costs associated with implementing such changes;

 

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possible contractual issues with customers, vendors, licensees or other contractual parties, including, for instance, claims regarding ceasing or renegotiation of existing contracts;

 

 

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the inability to rationalize as required product lines or retire legacy products and related after-sales services as a result of pre-existing customer commitments;

 

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loss of, or lower volume of business from, key customers, or the inability to renew agreements with existing customers or achieve new customer relationships, including limitations linked to customer policies as regards to aggregate vendor share or supplier diversity policy;

 

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integration and implementation costs resulting from the acquisition of Alcatel Lucent;

 

•

conditions imposed by laws, regulators or industry standards on our businesses or adverse regulatory or industry developments or litigation affecting the combined company, as a result of the Exchange Offer or otherwise;

 

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higher than anticipated costs associated with the transaction, including transaction costs;

 

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potential unknown or larger than estimated liabilities including those related to compliance issues and pension liabilities and unforeseen increased expenses, delays or regulatory conditions associated with the integration and Nokia’s ability to mitigate anticipated and contingent liabilities;

 

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potential deterioration of Nokia’s and Alcatel Lucent’s brands; and

 

•

performance shortfalls as a result of the diversion of management’s attention caused by completing the Exchange Offer and integrating Alcatel Lucent.

For these reasons, among others, you should be aware that it is possible that the integration process following the Exchange Offer could result in the distraction of Nokia’s management, the disruption of Nokia’s ongoing business or inconsistencies in its services, standards, controls, procedures and policies, any of which could adversely affect the ability of Nokia to maintain relationships with customers, vendors and employees or could otherwise have a material adverse effect on the business, financial conditions and/or results of operations of Nokia.

Nokia’s anticipated benefits from acquiring Alcatel Lucent are based on estimates that are dependent on external factors, and may not be achieved within the envisioned timeframe or at all.

There can be no assurance that Nokia will achieve any of the anticipated benefits of acquiring Alcatel Lucent, including business growth opportunities, cost synergy benefits, increased profitability and other synergy benefits described elsewhere in this exchange offer/prospectus within the timeframe currently estimated by Nokia, or that any such benefits can be achieved at all. The anticipated benefits of acquiring Alcatel Lucent depend, in part, on the efficiency improvement measures that both Nokia and Alcatel Lucent have individually taken in recent years, and are expected to continue to undertake in the near future. While some of these measures have already generated cost savings and operational efficiencies, the full intended benefits of these measures, or any additional initiatives that Nokia or the combined company may take in the future, may not be realized (see Nokia’s and Alcatel Lucent’s annual reports on Form 20-F for more information about the efficiency improvement measures). Furthermore, there can be no assurance that adverse developments in general economic conditions will not limit, eliminate or delay Nokia’s or the combined company’s ability to realize anticipated benefits, which could have a material adverse effect on the business, financial condition and/or results of operations of Nokia or Alcatel Lucent.

In addition, the anticipated cost reductions and other benefits expected to arise from acquiring Alcatel Lucent and the integration of Alcatel Lucent into Nokia’s existing business as well as related costs to implement such measures are derived from the estimates of Nokia and such estimates are inherently uncertain. The estimates included in this exchange offer/prospectus are based on a number of assumptions made in reliance on the information available to Nokia and management’s judgments based on such information, including, without limitation, information relating to the business operations, financial condition and results of operations of Alcatel Lucent. While Nokia believes these estimated

 

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synergy benefits and related costs are reasonable, the underlying assumptions are inherently uncertain and are subject to a wide variety of significant business, economic, and competitive factors, risks and uncertainties that could cause the actual results to differ materially from those contained in the synergy benefit and related cost estimates.

The Completion of the Exchange Offer would constitute a change of control of Alcatel Lucent which would give rise to an obligation to redeem some of Alcatel Lucent’s existing indebtedness.

Alcatel Lucent had approximately EUR 3.6 billion aggregate principal amount of outstanding senior notes as of June 30, 2015, of which EUR 2.1 billion contain a change of control provision. Completion of the Exchange Offer would constitute a “change of control” under the terms of some of Alcatel Lucent’s senior notes. Within 30 days following the change of control, Alcatel Lucent must give notice to each holder of such senior notes and offer to repurchase the relevant notes in cash equal to 101% of the aggregate principal amount of the notes repurchased plus accrued and unpaid interest on a date specified in the notice, which must be no earlier than 30 days and no later than 60 days following the day such notice is distributed. Alcatel Lucent may also make a change of control offer in advance of the change of control conditioned on the consummation of the change of control on the basis that a definitive agreement for the change of control is in place. Alcatel Lucent may not be able to obtain sufficient capital to repurchase or refinance Alcatel Lucent’s outstanding notes in these circumstances. Failure to repurchase the notes as required would result in an event of default under the terms of the notes, which could put Alcatel Lucent in default under agreements governing its other indebtedness, including the acceleration of the payment of any borrowings thereunder, and may have an adverse effect on the value of Alcatel Lucent Securities and, indirectly, on the value of the Nokia Shares.

The Completion of the transactions contemplated by the Exchange Offer would constitute a change of control of Alcatel Lucent which would give rise to an obligation to redeem all of the OCEANEs.

If the Exchange Offer is successful (resulting in a change of control of Alcatel Lucent under the terms of the OCEANEs), each holder of the OCEANEs who did not tender their OCEANEs into the Exchange Offer may request that Alcatel Lucent redeem their OCEANEs for cash at par plus, as applicable, accrued interest from the last interest payment date for each series of the OCEANEs until the early redemption date. Assuming none of the OCEANEs holders tender their OCEANEs in the Exchange Offer, and 100% of the OCEANEs holders instead request early redemption of their OCEANEs following the change of control of Alcatel Lucent, Alcatel Lucent would have to pay, based on an early repayment date of March 1, 2016, a total amount of up to EUR 1 781 million (including accrued interest). Alcatel Lucent may not be able to obtain sufficient capital to repurchase or refinance the OCEANEs in these circumstances. Failure to repurchase the OCEANEs as required may result in an event of default under the terms of such series of the OCEANEs, which could put Alcatel Lucent in default under agreements governing its other indebtedness, including the acceleration of the payment of any borrowings thereunder, and may have an adverse effect on the value of Alcatel Lucent Securities and, indirectly, on the value of the Nokia Shares.

The Exchange Offer will trigger certain provisions contained in certain Alcatel Lucent agreements that may require Alcatel Lucent to make change of control payments or permit a counterparty to an agreement with Alcatel Lucent to terminate that agreement.

Alcatel Lucent is a party to various agreements with third parties, including joint venture agreements, certain financing facilities, pension funds agreements, contracts for the performance of engineering and related work/services, IT contracts, technology and intellectual property rights licenses as well as employment agreements that contain change of control provisions that will be triggered upon the

 

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Completion of the Exchange Offer. Agreements with change of control provisions typically provide for or permit the termination of the agreement upon the occurrence of a change of control of one of the parties, which can be waived by the relevant counterparties. If Nokia and Alcatel Lucent determine that one or more of such waivers are necessary, Alcatel Lucent will make reasonable efforts to seek and obtain these waivers. Although Nokia and Alcatel Lucent believe the likelihood of a material consent being withheld is low, there can be no assurance that such consents will be obtained at all or on favorable terms. The inability to obtain waivers from more than one relevant counterparty could have a material adverse effect on the business, financial condition and/or results of operations at Nokia and Alcatel Lucent.

We have not verified the reliability of the Alcatel Lucent information included in, or incorporated by reference into, this exchange offer/prospectus and, as a result, our estimates of the impact of Completion of the Exchange Offer on the pro forma financial information in this exchange offer/prospectus may be incorrect.

In respect of information relating to Alcatel Lucent presented in, or incorporated by reference into, this exchange offer/prospectus, including all Alcatel Lucent financial information, we have relied exclusively upon publicly available information, including information publicly filed by Alcatel Lucent with securities regulatory authorities. Although we have no knowledge that would indicate that any statements contained in this exchange offer/prospectus based upon such reports and documents are inaccurate, incomplete or untrue, we were not involved in the preparation of such information and statements and, therefore, cannot verify the accuracy, completeness or truth of such information or any failure by Alcatel Lucent to disclose events that may have occurred, but that are unknown to us, that may affect the significance or accuracy of any such information. Alcatel Lucent has not provided representatives of Nokia with access to Alcatel Lucent’s accounting records, and, therefore, we have not independently verified certain adjustments and assumptions with respect to Alcatel Lucent’s financial information in preparing the pro forma financial information presented in this exchange offer/prospectus. Any financial information regarding Alcatel Lucent that may be detrimental to the combined entity and that has not been publicly disclosed by Alcatel Lucent, or errors in our estimates, may have an adverse effect on the benefits we expect to achieve through the Exchange Offer and may result in material inaccuracies in the pro forma financial information included in this exchange offer/prospectus.

The unaudited pro forma condensed combined financial information in this exchange offer/prospectus is presented for illustrative purposes only and may differ materially from the operating results and financial condition of the combined company following completion of the pro forma events.

The unaudited pro forma condensed combined financial information in this exchange offer/prospectus is presented for illustrative purposes only and is not necessarily indicative of what the combined company’s actual financial position or results of operations would have been had the pro forma events been completed on the dates indicated. In addition, the unaudited pro forma condensed combined financial information does not purport to project the future financial position or operating results of the combined company. The preparation of the pro forma condensed combined financial information is based upon available information and certain assumptions and estimates that Nokia and Alcatel Lucent currently believe are reasonable. The unaudited pro forma condensed combined financial information reflects adjustments, which are based upon preliminary estimates, to allocate the purchase price to Alcatel Lucent’s net assets. The purchase price allocation reflected in this exchange offer/prospectus is preliminary, and the final allocation of the purchase price will be based upon the actual purchase price and the fair value of the assets and liabilities of Alcatel Lucent as of Completion of the Exchange Offer. In addition, subsequent to the Completion of the Exchange Offer, there may be further refinements of the purchase price allocation as additional information becomes available. Accordingly, the final purchase accounting adjustments may differ materially from the pro forma adjustments reflected in this

 

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exchange offer/prospectus. See the section entitled “Unaudited Pro Forma Condensed Combined Financial Information.”

The Exchange Offer will affect the trading markets for any Alcatel Lucent Securities not acquired by Nokia and, as a result, their liquidity and market value could be adversely affected.

The Completion of the Exchange Offer is conditioned, among others, upon the satisfaction of the Minimum Tender Condition or, if waived by Nokia in its sole discretion, the crossing of the Mandatory Minimum Acceptance Threshold. Nokia’s acquisition of Alcatel Lucent Securities below the squeeze-out threshold would decrease both the number of Alcatel Lucent Securities that might otherwise trade publicly and the number of holders of Alcatel Lucent Securities, which could, in turn, also adversely affect the liquidity and market value of the Alcatel Lucent Securities not acquired in the Exchange Offer. In addition, as promptly as practicable following Completion of the Exchange Offer and subject to applicable law and Euronext Paris rules, Nokia intends to request Euronext Paris to delist the Alcatel Lucent Shares and OCEANEs from the regulated market of Euronext Paris. Nokia also intends, subject to applicable law, to cause Alcatel Lucent to terminate the Alcatel Lucent deposit agreement and intends to seek to delist the Alcatel Lucent ADSs from the NYSE and, when possible, to deregister the Alcatel Lucent Shares and Alcatel Lucent ADSs under the Exchange Act. This could, in turn, also adversely affect the liquidity and market value of the Alcatel Lucent Securities not acquired in the Exchange Offer.

On opening of the first U.S. business day following the ADS Tender Deadline, the NYSE may suspend trading in the Alcatel Lucent ADSs pending public announcement of the results of the Exchange Offer. Because the results of the Exchange Offer are not expected to be announced up to nine French trading days after the Expiration Date (although we expect the announcement to be made approximately seven French trading days after the Expiration Date), holders of Alcatel Lucent ADSs who do not tender their Alcatel Lucent ADSs in the Exchange Offer may be unable to trade Alcatel Lucent ADSs on the NYSE during this period. Further, if fewer than 600 000 Alcatel Lucent ADSs would remain outstanding following Completion of the Exchange Offer, the NYSE may not resume trading in the Alcatel Lucent ADSs even after the announcement of the results of the Exchange Offer. Holders of Alcatel Lucent ADSs who do not tender their Alcatel Lucent ADSs in the U.S. Offer may therefore be unable to trade their Alcatel Lucent ADSs on the NYSE at any point following the Expiration Date.

Alcatel Lucent shareholders will have a reduced ownership and voting interest in the combined company.

Alcatel Lucent shareholders currently have the right to vote in the election of directors of Alcatel Lucent and on certain other matters affecting Alcatel Lucent. Following the Exchange Offer, each Alcatel Lucent shareholder who tendered his or her Alcatel Lucent Shares or Alcatel Lucent ADSs into the Exchange Offer will become a shareholder of Nokia with a percentage ownership of the combined company that is much smaller than the shareholder’s percentage ownership of Alcatel Lucent. After Completion of the Exchange Offer and assuming that all Alcatel Lucent Securities are tendered into the Exchange Offer or the subsequent offering period, if any, former holders of Alcatel Lucent Securities are expected to own approximately 33.5% of the issued and outstanding Nokia Shares on a fully diluted basis (based on the number of shares outstanding on December 31, 2014). Because of this, Alcatel Lucent’s shareholders, as a group, will have substantially less influence on the management and policies of Nokia than they currently have, as a group, with respect to the management and policies of Alcatel Lucent.

 

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The issuance of additional Nokia Shares may dilute all other shareholdings.

Future issuances of Nokia Shares or other securities may dilute the holdings of shareholders and could materially and adversely affect the price of the Nokia Shares, including the Nokia Shares offered in the Exchange Offer. Nokia may issue additional Nokia Shares or securities convertible into Nokia Shares through directed offerings without pre-emptive rights for existing holders in connection with future acquisitions, any share incentive or share option plan or otherwise. Any such additional offering could reduce the proportionate ownership and voting interests of holders of Nokia Shares, as well as the earnings per share and the net asset value per share.

Listing of Nokia Shares on Euronext Paris may not succeed as expected or the listing may not take place at all.

In conjunction with the Exchange Offer, Nokia has applied for the Nokia Shares (including the Nokia Shares to be issued in connection with the Exchange Offer) to be listed on Euronext Paris. Nokia expects to request that Admission be approved to take effect prior to the Completion of the Exchange Offer. However, the Admission may be delayed or may not be approved in all respects or at all. Failure to list the Nokia Shares on Euronext Paris in the manner expected by Nokia’s management, including a delay in such listing, may have a material adverse effect on the completion of the transactions contemplated by the Exchange Offer and on Nokia’s and Alcatel Lucent’s respective businesses, financial conditions and results of operations. In addition, as a consequence of the listing of the Nokia Shares on Euronext Paris, Nokia will be expected to comply with the requirements applicable to issuers whose shares are listed on Euronext Paris. Compliance with said requirements may give rise to increased administrative work and costs, which may have an adverse effect on the financial position and results of operations of Nokia. Moreover, Nokia cannot predict the extent to which liquidity will develop on Euronext Paris, especially given the existing listing of the Nokia Shares on Nasdaq Helsinki and Nokia ADSs on the NYSE. This could reduce the value of your Nokia Shares and impair your ability to sell your Nokia Shares at the time or price at which you wish to sell them. A lack of liquidity on Euronext Paris may also impair Nokia’s ability to raise capital by selling Nokia Shares and may impair Nokia’s ability to acquire or invest in other companies, products or technologies by using Nokia Shares as consideration.

The Exchange Offer may not be successful, which will lead to a delisting of existing Nokia Shares on Euronext Paris.

In conjunction with the Exchange Offer, Nokia has applied for existing Nokia Shares to be admitted to trading on Euronext Paris. Nokia expects that such Admission will take effect prior to the Completion of the Exchange Offer. If the Exchange Offer is not successful, Nokia intends to delist the Nokia Shares from Euronext Paris, in which case the liquidity of such Nokia Shares on Euronext Paris will be reduced prior to the completion of such delisting.

Some of Alcatel Lucent’s directors and executive officers may have financial interests in the Exchange Offer that are different from or are in addition to those of holders of Alcatel Lucent Securities.

Certain members of the board of directors and management of Alcatel Lucent participated in determining the terms of the Exchange Offer. These individuals may have certain interests in the Exchange Offer that are different from, or in addition to, the interests of holders of Alcatel Lucent Securities generally and that may have caused them to view the proposed transaction more favorably and/or differently than you might.

 

 

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Information on the interests of executive officers and directors of Alcatel Lucent in the Exchange Offer is described in Alcatel Lucent’s Solicitation/Recommendation Statement on Schedule 14D-9, which is being distributed to the holders of Alcatel Lucent Securities together with this exchange offer/prospectus and is incorporated herein by reference.

Holders of Nokia ADSs may not be able to exercise voting rights or receive distributions as readily as holders of Nokia Shares.

Holders of Nokia Shares and Nokia ADSs may have to provide certain beneficial ownership information in order to be able to exercise voting rights in respect of their Nokia Shares and to exercise the voting rights of the Nokia Shares underlying their Nokia ADSs. In addition, holders of Nokia ADSs who would like to vote with their underlying Nokia Shares at general meetings of Nokia’s shareholders must instruct the Nokia depositary on how to vote these underlying Nokia Shares. Neither Nokia nor the Nokia depositary can guarantee that you will receive the notice for any general meeting or any voting materials provided by the Nokia depositary in time to ensure that you are able to instruct the Nokia depositary to vote the Nokia Shares represented by your Nokia ADSs. Furthermore, the Nokia depositary and its agents are not responsible for failure to carry out voting instructions or for the manner of carrying out voting instructions. Therefore, there is a risk that your vote may not be carried out in the manner intended and, in such instance, there would be no recourse available to you. You also may not receive the distributions that Nokia makes on the Nokia Shares or any value for them if it is illegal or impracticable for the Nokia depositary to make them available to you.

Upon your receipt of Nokia Shares in the U.S. Offer, you will become a shareholder in Nokia, a Finnish corporation, which may change certain shareholder rights and privileges you hold as a shareholder of Alcatel Lucent, a French corporation.

Nokia is a Finnish corporation and is governed by the laws of the Republic of Finland, its articles of association and the rules and regulations applicable to it as a result of the listing of the Nokia Shares on relevant markets from time to time, such as the rules of the Nasdaq Helsinki and the NYSE. Finnish law extends to shareholders certain rights and privileges that may not exist under French law and, conversely, may not extend certain rights and privileges that you currently have as a shareholder of Alcatel Lucent, which is governed by the laws of the French Republic and Alcatel Lucent’s articles of association. For a comparison of the rights of Nokia shareholders with the rights of Alcatel Lucent shareholders, please see “Comparison of Rights of Holders of Nokia Shares and Alcatel Lucent Shares.”

You may be forced to transfer your Alcatel Lucent Securities to Nokia if Nokia conducts a squeeze-out under French law or takes other steps to consolidate its ownership of Alcatel Lucent.

If, at the Completion of the Exchange Offer or the subsequent offering period, if any, Nokia owns 95% or more of the share capital and voting rights of Alcatel Lucent (Alcatel Lucent Shares held in treasury being considered as held by Nokia for the purpose of the calculation), Nokia intends to request from the AMF, within three months of the expiration of the French Offer period or the subsequent offering period, if any, the implementation of a squeeze-out for the remaining outstanding Alcatel Lucent Shares. In addition, if, at the Completion of the Exchange Offer or the subsequent offering period, if any, Nokia owns 95% or more of the sum of the outstanding Alcatel Lucent Shares and the Alcatel Lucent Shares issuable upon conversion of all of the OCEANEs then outstanding (Alcatel Lucent Shares held in treasury being considered as held by Nokia for the purpose of the calculation), Nokia intends to request from the AMF, within three months of the expiration of the French Offer period or the subsequent offering period, if any, the implementation of a squeeze-out for the remaining OCEANEs.

 

 

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If Nokia owns less than 95% of the share capital and voting rights of Alcatel Lucent immediately after the completion of the subsequent offering period, then Nokia reserves the right, subject to applicable law, to (i) commence a buy-out offer for the Alcatel Lucent Securities it does not own on the relevant date pursuant to Article 236-3 of the AMF General Regulation if at any time after the Completion of the Exchange Offer it owns 95% or more of the voting rights of Alcatel Lucent; (ii) commence at any time a simplified offer for the Alcatel Lucent Securities it does not own on the relevant date pursuant to Article 233-1 et seq. of the AMF General Regulation; (iii) purchase Alcatel Lucent Securities on the market (iv) cause Alcatel Lucent to be merged into Nokia or an affiliate thereof, contribute assets to, merge certain of its subsidiaries with, or undertake other reorganizations of, Alcatel Lucent; or (v) take any other steps to consolidate its ownership of Alcatel Lucent. We do not currently intend to structure any of the foregoing steps so that it would result in the OCEANEs becoming convertible bonds of Nokia Corporation, becoming debt obligations of Nokia Corporation or otherwise convertible into Nokia Shares or Nokia ADSs.

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

As a result of some of the foregoing steps, you may be forced to transfer your Alcatel Lucent Securities to Nokia by operation of law or otherwise.

Any failure by Nokia to promptly complete the squeeze-out of the remaining outstanding Alcatel Lucent Securities could adversely affect the market value of the Nokia Shares and the Nokia ADSs, and Nokia may be unable to fully realize the anticipated benefits of the Exchange Offer.

The Completion of the Exchange Offer is conditioned upon the satisfaction of the Minimum Tender Condition or, if waived by Nokia in its sole discretion, the crossing of the Mandatory Minimum Acceptance Threshold. Thus, at the Completion of the Exchange Offer, Nokia may own more than 50% but less than 95% of the share capital and voting rights of Alcatel Lucent Shares. Pursuant to the AMF General Regulation, Nokia must own 95% or more of the share capital and voting rights of Alcatel Lucent to implement a squeeze-out of the remaining outstanding Alcatel Lucent Shares, and 95% or more of the sum of the outstanding Alcatel Lucent Shares and the Alcatel Lucent Shares issuable upon conversion of all of the OCEANEs to implement a squeeze-out of the remaining outstanding OCEANEs (Alcatel Lucent Shares held in treasury being considered as held by Nokia for the purpose of the calculation). In addition, under French law, a squeeze-out must be implemented within three months after the expiration of a public offer period or the subsequent offering period, if any, for Alcatel Lucent Securities, such as the Exchange Offer.

Any temporary or permanent delay in acquiring all Alcatel Lucent Securities could adversely affect Nokia’s ability to integrate Alcatel Lucent’s business, including achieving targeted business benefits and synergies, as well as the market value of the Nokia Shares and Nokia ADSs and Nokia’s access to capital and other sources of funding on acceptable terms.

If the Alcatel Lucent Shares remain listed on Euronext Paris for a significant period of time following Completion of the Exchange Offer, AMF may not allow a squeeze-out of the remaining outstanding Alcatel Lucent Securities or Euronext Paris may refuse to delist Alcatel Lucent Shares, which would adversely affect Nokia’s ability to integrate Alcatel Lucent’s business into the Nokia group. In addition, Nokia may be unable to delist Alcatel Lucent ADSs from the NYSE or deregister Alcatel Lucent Shares and Alcatel Lucent ADSs under the Exchange Act, which would result in more onerous regulatory compliance obligations for the combined company and affect Nokia’s ability to fully integrate Alcatel Lucent’s business into Nokia group.

 

 

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Consummation of the Exchange Offer may result in adverse tax consequences to Nokia resulting from a change of ownership of Alcatel Lucent.

We have not had access to certain information concerning Alcatel Lucent’s tax situation. It is possible that the Completion of the Exchange Offer may result in adverse tax consequences arising from a change of ownership of Alcatel Lucent. The tax consequences of a change of ownership of a corporation can lead to an inability to carry-over certain tax attributes, including, but not limited to, tax losses, tax credits and/or tax basis of assets. In addition, the change of ownership may result in other tax costs not normally associated with the ordinary course of business. Such other tax costs include, but are not limited to, stamp duties, land transfer taxes, franchise taxes and other levies. The fact that Nokia is unaware of information relevant to a determination of the potential tax consequences and related costs represents an additional transaction risk.

Certain shareholders may be unable to exercise their pre-emptive rights.

Certain holders of Nokia Shares or Nokia ADSs resident in, or with a registered address in, certain jurisdictions other than Finland, France, or the United States, may not be able to exercise their pre-emptive rights in respect of the Nokia Shares, including the Nokia Shares offered in the Exchange Offer, in any future offerings unless a registration statement, or the equivalent thereof under the applicable laws of their respective jurisdictions, is effective with respect to such Nokia Shares or an exemption from any registration or similar requirements under the applicable laws of their respective jurisdictions is available. In such cases, holders of Nokia Shares or Nokia ADSs who cannot exercise their pre-emptive rights may experience dilution in their holdings in Nokia. Further, if the number of holders of Nokia Shares or Nokia ADSs who cannot exercise their pre-emptive rights is large and the subscription rights of holders of Nokia Shares or Nokia ADSs are sold on the market, this could have an adverse effect on the price of the subscription rights.

Future sales of Nokia Shares may depress the price of the Nokia Shares.

The market price of the Nokia Shares, including the Nokia Shares offered through the Exchange Offer, could decline as a result of sales of a large number of Nokia Shares in the market after the Exchange Offer or the perception that these sales could occur. These sales, or the possibility that these sales may occur, could also make it more difficult for Nokia to sell equity securities in the future at a time and price that it deems appropriate.

The amount of dividend and equity return distributed to shareholders for each financial period is uncertain.

Nokia cannot assure that it will pay dividends or equity return on the shares issued by it (including with respect to the capital optimization plans described in “The Transaction—Intentions of Nokia over the next twelve months—Dividend Policy”), nor is there any assurance as to the amount of any dividend or return of equity it might pay. The payment and the amount of any dividend or return of equity will be subject to the discretion of Nokia’s board of directors and, ultimately, the general meeting of Nokia’s shareholders and will depend on available cash balances, retained earnings, anticipated cash needs, the results of Nokia’s operations, its financial condition and any loan agreement restrictions binding Nokia as well as other relevant factors. See “The Transaction—Intentions of Nokia over the next twelve months—Dividend Policy” and “Description of the Nokia American Depositary Shares—Dividends and Distributions”.

 

 

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Risk Factors Relating to Nokia’s Business and Financing

Should the current uncertain market conditions continue or deteriorate, Nokia or the combined company may not be able to receive sufficient financing.

General uncertainty as well as adverse developments in the financial market and general economic conditions, in particular, effects of the continued uncertainty or worsening of the current economic and financial situation, for instance in Greece and Puerto Rico, could have a material adverse effect on Nokia’s ability to obtain sufficient financing needed by Nokia to carry out its business after Completion of the Exchange Offer. The uncertain market conditions may mean that the price of the financing needed by Nokia will increase and that it will be less readily available. Nokia could, at any given point in time, encounter difficulties in raising funds and, as a result, lack the access to liquidity it needs, which in turn may have a material adverse effect on the business, financial condition and/or results of operations of Nokia and Alcatel Lucent.

Nokia’s or the combined company’s ability to make scheduled payments on its debt is subject to general economic, financial, competitive, market, regulatory and other factors that may be beyond its control. There can be no assurance that Nokia’s or the combined company’s operations will continue to generate sufficient cash flow to allow it to service its debt, to fund its working capital, pension programs, capital expenditure and research and development requirement and to engage in future acquisitions. Failure to do so could have a material adverse effect on the business, financial condition and/or results of operations of Nokia and Alcatel Lucent.

Nokia’s or the combined company’s credit ratings may not reflect all risks and may not improve in the future.

Moody’s and Standard & Poor’s have assigned credit ratings to Nokia. These ratings may not reflect the potential impact of all risks relating to Nokia’s business or the potential impact of the combination with Alcatel Lucent. A credit rating is not a recommendation to buy, sell or hold securities and may be revised or withdrawn by the rating agency at any time. Should Nokia’s credit rating be downgraded, this could increase the financial costs of Nokia and thereby have a material adverse effect on the business, financial condition and/or results of operations of Nokia and Alcatel Lucent.

Nokia has set a goal of re-establishing its investment grade credit rating. Although Moody’s and Standard & Poor’s upgraded Nokia’s credit rating in 2014 with a positive outlook, there can be no assurance that Nokia or the combined company may in the future achieve an investment grade credit rating at the targeted time or at all. Failure to obtain an investment grade credit rating may have a material adverse effect on the business, financial condition and/or results of operations of Nokia and Alcatel Lucent.

In addition to the risks described herein, you should read and consider risk factors specific to Nokia’s businesses that will also affect the combined company after the Exchange Offer, described in the Nokia 2014 Form 20-F or in Nokia’s Report on Form 6-K, furnished to the SEC on August 14, 2015 and all of which are incorporated by reference into this exchange offer/prospectus.

Risk Factors Relating to Alcatel Lucent’s Business

In addition to the risks described herein, you should read and consider risk factors specific to Alcatel Lucent’s businesses that will also affect the combined company after the Exchange Offer, described in the Alcatel Lucent 2014 Form 20-F or in Alcatel Lucent’s Report on Form 6-K, furnished to the SEC on August 5, 2015 and all of which are incorporated by reference into this exchange offer/prospectus (other than the constant currency statements in the segment and division discussion).

 

 

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Risk Factors Relating to the Proposed Sale of our HERE business

The proposed sale of Nokia’s HERE business may not be completed in a timely manner, or at all.

The outcome, transaction timeline and closing of the proposed sale of Nokia’s HERE business may not materialize as expected, or at all. The conditions precedent for the sale of the HERE business, including regulatory conditions, may fail to be satisfied, and thus the transaction may fail to close. In addition, in connection with the sale of Nokia’s HERE business, the intellectual property portfolio of HERE is transferred to the buyers of the business and Nokia would no longer benefit from its use.

Furthermore, in connection with the sale of Nokia’s HERE business, Nokia has committed to indemnify the buyers with respect to certain losses that may be suffered by the buyers. Significant indemnification claims by the buyers with respect to the sale of the HERE business could have a material adverse effect on Nokia’s financial condition.

Also, if Nokia fails to sell its HERE business following the public announcement of the proposed sale, it may have an adverse effect on HERE’s brand, customer and supplier relationships and its reputation. This is particularly the case given that Nokia proposes to sell HERE to a consortium comprising some of HERE’s top key automotive customers.

If the proposed sale of the HERE business fails to complete, it could have a material adverse effect on the business, financial condition and/or results of operations of Nokia, or on the combined results of operation of Nokia and Alcatel Lucent following Completion of the Exchange Offer.

The proposed sale of our HERE business may be time-consuming and divert management attention.

The proposed sale of our HERE business may be time-consuming and divert the efforts and focus of our management and other key employees from their day-to-day business responsibilities.

 

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INDICATIVE TIMETABLE

You should take note of the dates and times set forth in the schedule below in connection with the U.S. Offer. These dates and times may be changed by Nokia in accordance with the terms of the Exchange Offer, the Conditions and the Memorandum of Understanding, as described in this exchange offer/prospectus.

 

Event		Calendar Date
Beginning of offer period		On November 18, 2015
Existing Nokia Shares expected to begin trading on Euronext Paris		On or about November 19, 2015
Extraordinary general meeting of Nokia shareholders		December 2, 2015 (a)
ADS Tender Deadline		5:00 P.M., New York City time, on December 22, 2015 (b)
Expiration Date		11:00 A.M., New York City time (5:00 P.M. Paris time), on December 23, 2015 (b)
Record date for payment of interest on the 2018 OCEANEs		December 31, 2015 (c)
Expected announcement by the AMF of the results of the French Offer (taking into account the results of the U.S. Offer)		On or about January 5, 2016 (d)
Nokia ADSs are expected to begin trading on the NYSE (on a “when-issued” basis)		On or about January 6, 2016
Expected settlement date		On or about January 7, 2016 (b)(e)
Subsequent offering period, if any		Approximately January 14, 2016 to February 3, 2016 (f)
Expected announcement by the AMF of the results of the subsequent offering period, if any		On or about February 8, 2016
Expected settlement date of the subsequent offering period, if any		On or about February 12, 2016

 

(a)	We are not asking you for a proxy pursuant to this exchange offer/prospectus and you are requested not to send us a proxy in response hereto.

(b)

Subject to the applicable rules and regulations of the AMF and the SEC, the French Offer period and the U.S. Offer period, respectively, may be extended. If the French Offer period is extended, the AMF will issue a notice of extension on its website http://www.amf-france.org. In addition, Nokia will post a notice of any extension of the French Offer or the U.S. Offer on the website www.nokia.com, and will issue a public announcement. The information on Nokia’s or the AMF’s website is not a part of this exchange offer/prospectus and is not incorporated by reference herein.

(c)	Interest on the 2018 OCEANEs will be paid on January 4, 2016, to the holders of record of the 2018 OCEANEs as of December 31, 2015, whether or not they tender their 2018 OCEANEs into the Exchange Offer.

(d)	The AMF will announce the results of the French Offer (taking into account the results of the U.S. Offer) approximately seven and in any event no later than nine French trading days following the Expiration Date.

(e)

In the event that the Conditions have been satisfied or, if applicable, waived, Nokia will accept for exchange and will exchange all Alcatel Lucent Securities that have been validly tendered into, and not withdrawn from, the Exchange Offer as of the Expiration Date and Nokia will deliver the Nokia Shares and Nokia ADSs approximately five French trading days following the announcement of the results of the French Offer by the AMF (taking into account the results of the U.S. Offer), in accordance with applicable French and U.S. laws and regulations.

(f)

According to Article 232-4 of the AMF General Regulation, if the Exchange Offer is successful and if Nokia holds less than 95% of the share capital and voting rights of Alcatel Lucent, the subsequent offering period will commence in connection with the French Offer within ten French trading days following the publication of the results of the French Offer (taking into account the results of the U.S. Offer) by the AMF, for a period of at least ten French trading days. Nokia has requested, and the AMF agreed, to extend the subsequent offering period for the French Offer to 15 French trading days. Nokia intends to provide a subsequent offering period for the U.S. Offer to match the French Offer.

 

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THE TRANSACTION

Background of the Exchange Offer

The following summarizes the material events (but only those material events) that led to the signing of the Memorandum of Understanding and the commencement of the Exchange Offer and does not purport to catalogue every conversation or meeting among representatives of Nokia and Alcatel Lucent.

In the ordinary course of business, Nokia and Alcatel Lucent each periodically reviews and evaluates industry developments and strategic options to enhance its respective shareholder value, including assessing potential strategic options and business acquisitions and combinations and engaging in preliminary discussions with other industry participants.

On July 19, 2013, Stephen Elop, the then President and Chief Executive Officer of Nokia, and Michel Combes, Chief Executive Officer of Alcatel Lucent, met in Brussels, Belgium, to discuss various strategic options involving Nokia and Alcatel Lucent, including a potential combination of Nokia Solutions and Networks with Alcatel Lucent, or a potential combination of Nokia Solutions and Networks and Alcatel Lucent’s wireless business.

In August and September 2013, following the initial discussions between the Chief Executive Officers of Nokia and Alcatel Lucent, further meetings and telephone conversations were held involving Timo Ihamuotila, Executive Vice President and Chief Financial Officer, from Nokia and Jesper Ovesen, the then Executive Chairman of Nokia Solutions and Networks, and Philippe Camus, Chairman of Alcatel Lucent, Michel Combes and Jean Raby, Chief Financial and Legal Officer, from Alcatel Lucent. These discussions focused on high level issues with respect to a potential combination of Nokia Solutions and Networks and Alcatel Lucent, including various scenarios for the structuring of any such combination. The Nokia board of directors was updated on these discussions in its meetings on September 17 and 29, 2013.

On October 2, 2013, Risto Siilasmaa, Chairman of the Nokia board of directors and Timo Ihamuotila met with Philippe Camus and Michel Combes in London, England, at the offices of Sullivan & Cromwell LLP (“Sullivan & Cromwell”), external legal advisor to Alcatel Lucent, with Philippe Camus participating via a video conference link from New York to discuss the potential combination of Nokia Solutions and Networks and Alcatel Lucent at a conceptual level. At this meeting, Nokia representatives indicated that timing of any discussions was not optimal from Nokia’s perspective given the then ongoing sale of Nokia’s Devices and Services business to Microsoft.

Between October 2013 and March 2014, the Nokia board of directors received updates on the discussions with Alcatel Lucent representatives and discussed various strategic options available for Nokia Solutions and Networks in its meetings.

Between October 2013 and May 2014, Nokia and Alcatel Lucent engaged in periodic contacts to assess willingness to reengage on discussions of a potential strategic transaction and continued high level discussions on possible transaction terms and structures during this period.

On April 30, 2014, Nokia’s board of directors met and reviewed in detail different strategic options for Nokia’s networks business. It was concluded that assets of Alcatel Lucent—either the wireless business or the entire Alcatel Lucent—constituted the best strategic fit for Nokia. Representatives of Nokia subsequently contacted representatives of Alcatel Lucent to re-engage on discussions of a potential strategic transaction.

 

 

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In the summer of 2014, substantive discussions between Nokia and Alcatel Lucent resumed following a call between Timo Ihamuotila and Jean Raby, where Alcatel Lucent proposed to contribute its wireless business to Nokia Solutions and Networks in return for a minority interest in the enlarged Nokia Solutions and Networks. The scope of the contribution excluded legacy pension liabilities in the United States, which would have remained with Alcatel Lucent. There were no further discussions on a combination of Nokia Solutions and Networks and Alcatel Lucent.

On July 29, 2014, a Nokia team led by Samih Elhage, Executive Vice President and Chief Financial and Operating Officer of Nokia Networks met with Alcatel Lucent representatives, including Jean Raby, Remi Thomas, Senior Vice President Mergers & Acquisitions of Alcatel Lucent, and Philippe Keryer, Chief Strategy and Innovation Officer of Alcatel Lucent, in Paris, France, to discuss at a high level the potential contribution of Alcatel Lucent’s wireless business to Nokia Solutions and Networks in return for a minority interest in the enlarged Nokia Solutions and Networks.

On August 6, 2014, Timo Ihamuotila and Samih Elhage had a telephone conversation with Jean Raby concerning a potential contribution of Alcatel Lucent’s wireless business to Nokia Solutions and Networks in return for a minority interest in the enlarged Nokia Solutions and Networks. The discussion focused on the strategic rationale for such transaction and the potential structuring matters.

Throughout August 2014, there were a series of telephone discussions involving representatives of Nokia, including Timo Ihamuotila and Samih Elhage, and representatives of Alcatel Lucent, including Jean Raby and Philippe Keryer, regarding the potential contribution of Alcatel Lucent’s wireless business to Nokia Solutions and Networks in return for a minority interest in the enlarged Nokia Solutions and Networks, particularly around the scope of the assets to be contributed, the terms of any non-compete and a strategic partnership in IP routing. Nokia and Alcatel Lucent concluded that it was not possible to arrive at satisfactory terms for the potential contribution of Alcatel Lucent’s wireless business to Nokia Solutions and Networks in return for a minority interest in the enlarged Nokia Solutions and Networks, largely as a result of remaining overlap in the businesses and the potential conflicts created by Alcatel Lucent holding a minority interest in the enlarged Nokia Solutions and Networks business. Nokia and Alcatel Lucent agreed they would continue to explore other possible strategic transactions that would not raise similar concerns, including a sale of Alcatel Lucent’s wireless business to Nokia.

On September 4, 2014, Nokia and Alcatel Lucent agreed to actively discuss a possible sale of Alcatel Lucent’s wireless business to Nokia and entered into a non-disclosure agreement.

On September 15, 2014, Nokia representatives, including Timo Ihamuotila, Maria Varsellona, Executive Vice President and Chief Legal Officer of Nokia and Samih Elhage met in London, England, with Jean Raby, Remi Thomas and Philippe Keryer, to discuss a potential sale of Alcatel Lucent’s wireless business to Nokia and the mechanics for a potential carve out of Alcatel Lucent’s wireless business from the rest of Alcatel Lucent.

Between September 15, 2014 and September 22, 2014, representatives of Nokia and Alcatel Lucent engaged in several telephonic discussions and exchanged emails with respect to a potential acquisition of Alcatel Lucent’s wireless business by Nokia. The discussions focused on the carve out of Alcatel Lucent’s wireless business from the rest of Alcatel Lucent and matters related to the treatment of Alcatel-Lucent Shanghai Bell, Co. Ltd. (“ASB”), a joint venture between Alcatel Lucent and China Huaxin Post and Telecommunication Economy Development Center, in connection with a potential transaction between Nokia and Alcatel Lucent.

On September 22, 2014, Nokia representatives, including Samih Elhage, together with representatives of J.P. Morgan Limited (“J.P. Morgan”), financial advisor to Nokia, and Skadden, Arps, Slate,

 

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Meagher & Flom LLP (“Skadden Arps”), external legal advisor to Nokia, participated in an Alcatel Lucent management presentation in Chicago, Illinois, U.S., with respect to Alcatel Lucent’s wireless business. The presentation was led by Dave Geary, Alcatel Lucent President of Wireless, Steven Sherman, Chief Financial Officer of Wireless, and Remi Thomas, and was also attended by the representatives of Zaoui, financial advisor to Alcatel Lucent, and Sullivan & Cromwell.

On September 28, 2014, Rajeev Suri, President and Chief Executive Officer of Nokia, called Michel Combes and indicated that, subject to the approval of the Nokia board of directors and other customary conditions, including completion of due diligence, Nokia would be prepared to submit a non-binding offer to purchase Alcatel Lucent’s wireless business for approximately EUR 600 million. Mr. Combes advised Mr. Suri that a purchase price of EUR 600 million would be insufficient for management to recommend the transaction to Alcatel Lucent’s board of directors, but that Alcatel Lucent would continue to negotiate and conduct due diligence exercises with a view to improving the terms of the transaction. Following further negotiations and due diligence, Nokia indicated that it would be prepared to offer up to EUR 1.1 billion for the purchase of Alcatel Lucent’s wireless business, subject to the approval of the Nokia board of directors and other customary conditions, including completion of due diligence.

On October 6, 2014, Nokia representatives, including Timo Ihamuotila and Samih Elhage, together with representatives of J.P. Morgan and Skadden Arps, participated in an Alcatel Lucent management presentation in Paris, France, at the offices of Sullivan & Cromwell focusing on the carve-out of Alcatel Lucent’s wireless business. The presentation was led by Dave Geary and Remi Thomas, and was also attended by Jean Raby and the representatives of Zaoui and Sullivan & Cromwell.

On October 13, 2014, the Nokia board of directors held a conference call meeting, where it resolved to authorize the management of Nokia to make a non-binding offer to acquire Alcatel Lucent’s wireless business.

On October 15, 2014, Nokia sent a letter to Alcatel Lucent with a non-binding indicative offer for the acquisition of Alcatel Lucent’s wireless business. The letter offered to acquire Alcatel Lucent’s wireless business (with such scope as identified in the letter and including Alcatel Lucent’s interest in the wireless business of ASB, but excluding Alcatel Lucent’s interest in the non-wireless business of ASB) for EUR 1.15 billion cash payable at closing of the transaction plus EUR 250 million cash payable post-closing, subject to Nokia’s ability to repatriate certain cash funds held by Alcatel Lucent’s wireless business. The letter included several assumptions and numerous conditions, including performance of a due diligence review of Alcatel Lucent’s wireless business to Nokia’s satisfaction, the delivery to Nokia of a comprehensive plan for the carve out of Alcatel Lucent’s wireless business from Alcatel Lucent, completion of the carve out in all material respects before closing of the transaction, negotiation of definitive documentation to implement the transaction, and closing conditions (including Nokia’s request to condition the transaction on obtaining consents from key customers of Alcatel Lucent).

Between October 19, 2014 and November 3, 2014, representatives of Nokia, including Timo Ihamuotila and Maria Varsellona, representatives of Alcatel Lucent, including Jean Raby and Remi Thomas, and the representatives of J.P. Morgan, Zaoui, Skadden Arps and Sullivan & Cromwell participated in a series of conference calls, discussing Nokia’s non-binding indicative offer letter and its terms and conditions. The discussions focused on Nokia’s indicative price, the process for carving out Alcatel Lucent’s wireless business from the rest of the company, the scope of and responsibility for regulatory conditions and other closing conditions (including Nokia’s request to condition the transaction on obtaining consents from key customers of Alcatel Lucent). The discussions also focused on the process for carving out the wireless business of ASB from the rest of ASB, which would have required the consent of Alcatel Lucent’s joint venture partner in ASB.

 

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On November 13, 2014, representatives of Sullivan & Cromwell sent to representatives of Skadden Arps the initial draft term sheet for a potential acquisition of Alcatel Lucent’s wireless business by Nokia.

On November 13, 2014, representatives of Nokia, J.P. Morgan and Skadden Arps met with the representatives of Alcatel Lucent, Zaoui and Sullivan & Cromwell in London, England, at the offices of Sullivan & Cromwell to discuss the initial draft term sheet for a potential acquisition of Alcatel Lucent’s wireless business by Nokia. The discussion focused on the conditions precedent for the signing of definitive documentation and closing of the transaction (including Nokia’s request to condition the transaction on obtaining consents from key customers of Alcatel Lucent) and termination rights that may be available to either party, as well as the process for carving out Alcatel Lucent’s wireless business from the rest of the company and the process for carving out the wireless business of ASB from the rest of ASB.

On November 16, 2014, the Nokia board of directors held a conference call meeting, during which Nokia management briefed the board of directors on the progress in the negotiations to acquire the Alcatel Lucent wireless business. At the meeting, the Nokia board of directors resolved to authorize the management of Nokia to continue to engage with the representatives of Alcatel Lucent with respect to a potential acquisition of Alcatel Lucent’s wireless business.

On November 17, 2014, Rajeev Suri and Timo Ihamuotila met with Michel Combes and Jean Raby in Helsinki, Finland to discuss the material aspects of the draft term sheet for a potential acquisition of Alcatel Lucent’s wireless business by Nokia. The discussion focused on the purchase price adjustment mechanism, logistics of carving out the wireless business from Alcatel Lucent, the transaction timeline and transaction termination fees. Alcatel Lucent also proposed that the parties consider discussions on a potential full combination of the businesses of Nokia and Alcatel Lucent, but no substantive discussions on this potential combination occurred at this time. After this meeting, the management of Nokia began exploring with its outside advisors the possibility of an acquisition of Alcatel Lucent by Nokia. Nokia’s management reported its findings to Nokia’s board of directors at a meeting held on December 2, 2014.

On November 21, 2014, representatives of J.P. Morgan and Skadden Arps met in London, England, at the offices of Zaoui with the representatives of Zaoui and Sullivan & Cromwell to discuss the term sheet for a potential acquisition of Alcatel Lucent’s wireless business by Nokia. The discussion focused on the inclusion of a non-compete provision into a potential transaction as well as a standstill provision, regulatory conditions and a potential fiduciary out provision for Alcatel Lucent in connection with a superior proposal.

On November 21, 2014, representatives of Skadden Arps sent to representatives of Sullivan & Cromwell a revised draft of the term sheet for a potential acquisition of Alcatel Lucent’s wireless business by Nokia, which reflected significant outstanding differences on key transaction terms, including purchase price, purchase price adjustment mechanism, reorganization steps, closing conditions (including Nokia’s request to condition the transaction on obtaining consents from key customers of Alcatel Lucent), allocation of regulatory risk, termination rights, transaction termination fees, carve-out issues and timing and treatment of ASB.

On November 24, 2014, representatives of Nokia, including Timo Ihamuotila, Maria Varsellona and Samih Elhage, and representatives of J.P. Morgan and Skadden Arps met in Paris, France, at the offices of Skadden Arps with the representatives of Alcatel Lucent, including Jean Raby, Remi Thomas and Philippe Keryer, and the representatives of Zaoui and Sullivan & Cromwell to discuss the term sheet for a potential acquisition of Alcatel Lucent’s wireless business by Nokia. The discussion focused on the key transaction terms, including purchase price, purchase price adjustment mechanism,

 

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reorganization steps, closing conditions (including Nokia’s request to condition the transaction on obtaining consents from key customers of Alcatel Lucent), allocation of regulatory risk, termination rights, transaction termination fees, carve-out issues and timing and treatment of ASB.

On December 2, 2014, the Nokia board of directors held a meeting in London, England. The board of directors was updated by management on the progress of the negotiations with Alcatel Lucent and key aspects of those negotiations, including potential issues that may arise in connection with such transaction. At that meeting, the Nokia board of directors resolved to authorize Nokia management to continue to engage with the representatives of Alcatel Lucent with respect to a potential acquisition of Alcatel Lucent’s wireless business, and also to explore, in parallel, together with Nokia’s outside advisors, a potential acquisition of Alcatel Lucent by Nokia and the benefits and potential issues of such combination.

During December 2014, representatives of Nokia and Alcatel Lucent engaged in several telephonic discussions and exchanged emails with respect to the term sheet for a potential acquisition of Alcatel Lucent’s wireless business by Nokia. The discussions focused on key terms, including purchase price, purchase price adjustment mechanism, closing conditions (including Nokia’s request to condition the transaction on obtaining consents from key customers of Alcatel Lucent), allocation of regulatory risk, termination rights, transaction termination fees, carve-out issues and timing and treatment of ASB.

On January 5, 2015, representatives of Sullivan & Cromwell sent to representatives of Skadden Arps a revised draft of the term sheet for a potential acquisition of Alcatel Lucent’s wireless business by Nokia, which reflected continuing discussions on key terms, including purchase price, purchase price adjustment mechanism, closing conditions (including Nokia’s request to condition the transaction on obtaining consents from key customers of Alcatel Lucent), allocation of regulatory risk, termination rights, transaction termination fees, carve-out issues and timing and treatment of ASB.

On January 7, 2015, representatives of Nokia, including Timo Ihamuotila and Maria Varsellona, and representatives of J.P. Morgan and Skadden Arps met in Berlin, Germany with the representatives of Alcatel Lucent, including Jean Raby and Remi Thomas, and the representatives of Zaoui and Sullivan & Cromwell to discuss the term sheet for a potential acquisition of Alcatel Lucent’s wireless business by Nokia. The discussion focused on the purchase price adjustment, logistics of carving out the wireless business from Alcatel Lucent and the size of the transaction termination fee. Following this discussion, Mr. Ihamuotila and Mr. Raby had a separate discussion in general terms on a potential acquisition of Alcatel Lucent by Nokia.

On January 9, 2015, representatives of Skadden Arps sent to representatives of Sullivan & Cromwell a revised draft of the term sheet for a potential acquisition of Alcatel Lucent’s wireless business by Nokia, which reflected continuing discussions on purchase price, purchase price adjustment mechanism, closing conditions (including Nokia’s request to condition the transaction on obtaining consents from key customers of Alcatel Lucent), allocation of regulatory risk, termination rights, transaction termination fees and definition of material adverse effect.

On January 14, 2015, representatives of Alcatel Lucent and their advisors presented carve-out financial information in respect of Alcatel Lucent’s wireless business to representatives of Nokia and their advisors in Munich, Germany.

On January 14, 2015, representatives of Sullivan & Cromwell sent to representatives of Skadden Arps a revised draft of the term sheet for a potential acquisition of Alcatel Lucent’s wireless business by Nokia reflecting the continuing discussions on key terms, including purchase price, closing conditions (including Nokia’s request to condition the transaction on obtaining consents from key customers of Alcatel Lucent), allocation of regulatory risk, termination rights, reverse transaction termination fees and definition of material adverse effect.

 

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On January 16, 2015, Risto Siilasmaa met with Philippe Camus, Chairman of Alcatel Lucent’s board of directors, in Paris, France to discuss the potential acquisition of Alcatel Lucent’s wireless business by Nokia. The discussion focused on high level issues associated with the potential acquisition of the wireless business, including the proposed purchase price and transaction timeline. Mr. Siilasmaa and Mr. Camus also discussed the potential acquisition of Alcatel Lucent by Nokia.

On January 19, 2015, representatives of Nokia, including Timo Ihamuotila, Maria Varsellona and Samih Elhage, and representatives of J.P. Morgan and Skadden Arps participated in a conference call with the representatives of Alcatel Lucent, including Jean Raby and Remi Thomas, and the representatives of Zaoui and Sullivan & Cromwell to discuss the term sheet for a potential acquisition of Alcatel Lucent’s wireless business by Nokia. The discussion focused on the termination provisions for a potential transaction and the closing conditions (including Nokia’s request to condition the transaction on obtaining consents from key customers of Alcatel Lucent).

On January 20, 2015, the Nokia board of directors held a meeting in Espoo, Finland, where the board of directors reviewed the results of Nokia management’s preliminary assessment of a potential acquisition of Alcatel Lucent by Nokia by way of an exchange offer and the benefits and drawbacks associated with such combination as compared to the acquisition of Alcatel Lucent’s wireless business. At that meeting, the Nokia board of directors resolved to authorize Nokia management to engage in a limited due diligence review of Alcatel Lucent with respect to a potential acquisition of Alcatel Lucent by Nokia.

On January 23, 2015, representatives of Skadden Arps sent to representatives of Sullivan & Cromwell a revised draft of the term sheet for a potential acquisition of Alcatel Lucent’s wireless business by Nokia, which reflected significant remaining differences on purchase price, closing conditions (including Nokia’s request to condition the transaction on obtaining consents from key customers of Alcatel Lucent), allocation of regulatory risk, termination rights and size of reverse transaction termination fee.

On January 26, 2015, Timo Ihamuotila called Jean Raby, informing him that Nokia would like to explore the possibility of acquiring Alcatel Lucent. Mr. Raby stated that Alcatel Lucent was prepared to engage in preliminary discussions on this topic. Mr. Ihamuotila stated that Nokia would like to engage in a due diligence review of Alcatel Lucent with a view to a potential acquisition of Alcatel Lucent by Nokia. Mr. Ihamuotila and Mr. Raby agreed that Nokia would perform limited due diligence review of Alcatel Lucent, focusing on Alcatel Lucent’s pension liabilities, intellectual property and regulatory and compliance matters. On January 29, 2015, representatives of Nokia sent to representatives of Alcatel Lucent a due diligence request list for such review. Alcatel Lucent provided reciprocal due diligence requests, and engaged in due diligence and valuation exercises in respect of Nokia.

On January 27, 2015, representatives of Nokia, including Maria Varsellona and Samih Elhage, and representatives of J.P. Morgan and Skadden Arps participated in a conference call with the representatives of Alcatel Lucent, including Jean Raby and Remi Thomas, and the representatives of Zaoui and Sullivan & Cromwell to discuss the term sheet for a potential acquisition of Alcatel Lucent’s wireless business by Nokia.

On February 2, 2015, representatives of Nokia and its advisors met in Paris, France, at the offices of Sullivan & Cromwell with the representatives of Alcatel Lucent and its advisors to conduct due diligence review of Alcatel Lucent with respect to a potential acquisition of Alcatel Lucent by Nokia. Due diligence discussions focused on Alcatel Lucent’s pension liabilities, as well as regulatory and compliance matters. Nokia and Alcatel Lucent continued to perform reciprocal due diligence review of each other’s businesses on select topics, including pension liabilities, regulatory and compliance matters, intellectual property, ASB, Nokia’s HERE business, recent acquisitions by Nokia and material litigation until April 14, 2015.

 

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On February 5, 2015, Risto Siilasmaa and Philippe Camus had a telephone conversation where they generally discussed the status of negotiations between the parties and a potential strategic transaction.

On February 9, 2015, Rajeev Suri met with Michel Combes in London, England to discuss a potential sale of Alcatel Lucent’s wireless business to Nokia and to conduct a high level discussion of the rationale for a potential acquisition of Alcatel Lucent by Nokia.

Between February 13, 2015 and February 17, 2015, representatives of Nokia and Alcatel Lucent held a series of telephone conversations, discussing the term sheet for a potential acquisition of Alcatel Lucent’s wireless business by Nokia. At the conclusion of these discussions, a number of material issues set forth in the draft term sheet remained outstanding and unresolved, including closing conditions (including Nokia’s request to condition the transaction on obtaining consents from key customers of Alcatel Lucent) and the timeline and conditions for the planned carve out and related possible price implications. As a result of the negotiations and discussions to date, Nokia and Alcatel Lucent also viewed a potential acquisition of Alcatel Lucent’s wireless business by Nokia as having significant obstacles to execution associated with the process for carving out Alcatel Lucent’s wireless business from the rest of the company, the process for carving out the wireless business of ASB from the rest of ASB and the response of customers and other stakeholders to a carve-out transaction, and that a full combination of the businesses of Nokia and Alcatel Lucent could be comparatively advantageous from both a strategic and a value creation standpoint. In particular, certain customers of Alcatel Lucent had proactively expressed concerns about the potential disruption to business that a sale of Alcatel Lucent’s wireless business would entail, given the long period needed to separate the wireless business from the other businesses of Alcatel Lucent. Nokia and Alcatel Lucent also recognized that a combination would be consistent with market preference for large vendors with scale and scope, particularly in 5G. Following February 17, 2015, Nokia and Alcatel Lucent did not resume substantive discussions with respect to a potential acquisition of Alcatel Lucent’s wireless business by Nokia and did not execute any additional documentation with respect to any such transaction.

On February 20, 2015, the Nokia board of directors held a conference call meeting, where it resolved to authorize the management of Nokia to fully engage in discussions with the representatives of Alcatel Lucent with respect to a potential acquisition of Alcatel Lucent by Nokia.

On February 27, 2015, the Nokia board of directors held a conference call meeting to discuss the preliminary results of the due diligence review of Alcatel Lucent and the valuation of Alcatel Lucent. The board of directors resolved to authorize Nokia representatives to make a non-binding offer to acquire Alcatel Lucent.

On March 5, 2015, representatives of Nokia, including Risto Siilasmaa, Rajeev Suri, Timo Ihamuotila and Maria Varsellona met with representatives of Alcatel Lucent, including Philippe Camus, Michel Combes and Jean Raby, in Paris, France, at the offices of Sullivan & Cromwell. At the meeting, Mr. Siilasmaa and Mr. Suri communicated to Mr. Camus and Mr. Combes Nokia’s non-binding offer to acquire Alcatel Lucent for 0.491 Nokia Shares for each Alcatel Lucent Share. In addition, Nokia representatives discussed other terms and conditions and various aspects of a potential transaction. Mr. Camus and Mr. Combes indicated that Alcatel Lucent viewed the offer to be inadequate in light of its view of the relative values of Alcatel Lucent Shares and Nokia Shares.

On March 8, 2015, representatives of Nokia, met in London, England, at the offices of Skadden Arps with representatives of Alcatel Lucent to conduct limited financial due diligence review of Alcatel Lucent to assist Nokia in its valuation of Alcatel Lucent. Alcatel Lucent engaged in reciprocal due diligence and valuations exercises in respect of Nokia.

On March 9, 2015, Rajeev Suri met with Michel Combes in Paris, France to discuss the transaction timeline and the scope and length and the extent of each company’s due diligence efforts.

 

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On March 10, 2015, Risto Siilasmaa met with Philippe Camus in London, England for an overall discussion of the potential transaction and significant obstacles to announcing a transaction.

Between March 11, 2015 and March 14, 2015, representatives of Nokia, J.P. Morgan, Skadden Arps, Alcatel Lucent, Zaoui and Sullivan & Cromwell held a series of telephonic discussions concerning key terms of a potential transaction. The discussions focused on the scope and length of due diligence review and transaction timing, as well as standstill and exclusivity proposals. Nokia and Alcatel Lucent were not able to reach any agreement on possible standstill or exclusivity provisions at this time.

On March 15, 2015, the Nokia board of directors held a conference call meeting. Nokia management updated the board of directors on the status of its discussions with Alcatel Lucent and interim results of Nokia’s due diligence review. The Nokia board of directors resolved to authorize Nokia management to continue to engage in discussions with Alcatel Lucent and to continue to perform reciprocal due diligence review.

On March 16, 2015, representatives of Nokia, including Timo Ihamuotila and Maria Varsellona, and representatives of J.P. Morgan and Skadden Arps met in London, England at the offices of Sullivan & Cromwell with the representatives of Alcatel Lucent, including Jean Raby and Remi Thomas, and the representatives of Zaoui and Sullivan & Cromwell, to discuss the non-financial terms of the combination, including the conditions precedent of a potential exchange offer by Nokia to acquire Alcatel Lucent. The discussions focused on the timing of the Nokia extraordinary general meeting of shareholders contemplated by the Nokia Shareholder Approval and the level of the minimum tender condition.

On March 17, 2015, Risto Siilasmaa, Timo Ihamuotila and Maria Varsellona met with Philippe Camus, Michel Combes and Jean Raby in London, England, at the offices of Skadden Arps to discuss the proposed exchange ratio, offer structure and key offer terms, including offer conditions. Representatives of Nokia presented a revised proposal with an exchange ratio range of 0.514 to 0.538 Nokia Shares per Alcatel Lucent Share, as compared to the offer of 0.491 Nokia Shares per Alcatel Lucent Share made on March 5, 2015. Mr. Camus responded that Alcatel Lucent viewed the offer to be inadequate in light of its view of the relative values of Alcatel Lucent Shares and Nokia Shares. Representatives of Nokia informed representatives of Alcatel Lucent that the Nokia board of directors was not yet prepared to revise the exchange ratio and that the board of directors was meeting on March 25, 2015 to further discuss a potential transaction with Alcatel Lucent.

On March 22, 2015, Risto Siilasmaa and Philippe Camus had a telephone conversation where they discussed the proposed exchange ratio, handling of Alcatel Lucent’s submarine business and Nokia’s governance structure after the potential acquisition.

On March 25, 2015, Risto Siilasmaa and Philippe Camus had a telephone conversation where they discussed the proposed exchange ratio and status of Nokia’s approach to the transaction.

On March 25, 2015, the Nokia board of directors held an in-person meeting in Espoo, Finland, where the board of directors resolved to authorize Nokia representatives to communicate to the Alcatel Lucent representatives an increased exchange ratio.

On March 27, 2015, representatives of Nokia, including Risto Siilasmaa, Rajeev Suri, Timo Ihamuotila and Maria Varsellona met with representatives of Alcatel Lucent, including Philippe Camus, Michel Combes and Jean Raby in London, England, at the offices of Sullivan & Cromwell. Mr. Siilasmaa and Mr. Suri began the meeting by confirming Nokia’s offer to acquire Alcatel Lucent for 0.538 Nokia Shares for each Alcatel Lucent Share. Following negotiations between the parties, the representatives of Nokia and Alcatel Lucent agreed on the exchange ratio of 0.5500 Nokia Shares for each Alcatel Lucent Share, subject to the approval of Alcatel Lucent’s board of directors.

 

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On March 29, 2015, Philippe Camus telephoned Risto Siilasmaa to inform him of the support of Alcatel Lucent’s board of directors for the proposed exchange ratio, subject to agreement on other terms of the proposed transaction.

On March 30, 2015, representatives of Skadden Arps sent the initial draft of the Memorandum of Understanding to the representatives of Sullivan & Cromwell.

On April 1, 2015, Risto Siilasmaa had a telephone conversation with Philippe Camus where they discussed the proposed exchange ratio and communications with the French government.

On April 2, 2015, representatives of Nokia, including Timo Ihamuotila and Maria Varsellona, and representatives of J.P. Morgan and Skadden Arps met in Paris, France, at the offices of Sullivan & Cromwell with representatives of Alcatel Lucent, including Jean Raby, and the representatives of Zaoui and Sullivan & Cromwell to discuss the key terms of the Memorandum of Understanding, including responsibility for the regulatory approvals in connection with the Exchange Offer and Exchange Offer conditions.

On April 5, 2015, representatives of Sullivan & Cromwell sent a revised draft of the Memorandum of Understanding to the representatives of Skadden Arps, which reflected continuing discussions on key terms, including scope of representations, warranties and covenants, closing conditions, allocation of regulatory risk, termination rights, transaction termination fees and board and shareholder recommendation processes.

On April 6, 2015, representatives of Nokia, including Timo Ihamuotila and Maria Varsellona, J.P. Morgan and Skadden Arps held a conference call with representatives of Alcatel Lucent, including Jean Raby, Zaoui and Sullivan & Cromwell to discuss the key terms of the Memorandum of Understanding, including transaction conditions and termination fees.

On April 8, 2015, representatives of Skadden Arps sent a revised draft of the Memorandum of Understanding to the representatives of Sullivan & Cromwell, which reflected continuing discussions on key terms, including scope of representations, warranties and covenants, closing conditions, allocation of regulatory risk, termination rights, transaction termination fees and board and shareholder recommendation processes.

On April 10, 2015 and April 11, 2015, the full management teams of Nokia, including Rajeev Suri, Timo Ihamuotila and Maria Varsellona, and Alcatel Lucent, including Michel Combes, Jean Raby and Remi Thomas, held reciprocal all-day management presentations and due diligence sessions in London, England, at the offices of Skadden Arps. These reciprocal due diligence sessions covered, among other things, financial, human resources, legal, pensions, compliance, tax and business line specific diligence matters. Representatives of J.P. Morgan, Zaoui, Skadden Arps and Sullivan & Cromwell also participated in these sessions.

On April 11, 2015, representatives of Sullivan & Cromwell sent a revised draft of the Memorandum of Understanding to the representatives of Skadden Arps, which reflected continuing discussions on key terms, including closing conditions, allocation of regulatory risk, termination rights, transaction termination fees and board and shareholder recommendation processes.

On April 12, 2015, representatives of Nokia, including Rajeev Suri, Timo Ihamuotila and Maria Varsellona, and representatives of J.P. Morgan and Skadden Arps met with the representatives of Alcatel Lucent, including Michel Combes, Jean Raby and Remi Thomas, and the representatives of Zaoui and Sullivan & Cromwell, in London, England, at the offices of Skadden Arps to discuss the Memorandum of Understanding. The parties agreed on the scope and timing of the remaining transaction conditions at this meeting.

 

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On April 13, 2015, Michel Combes contacted the Ministry of Economy, Industry and Digital Technology of the French Republic to update them on strategic developments with respect to Alcatel Lucent, following previous periodic discussions on strategic options under consideration, and to inform them of the likely announcement of a potential transaction between Nokia and Alcatel Lucent in the near term.

On April 13, 2015, representatives of Skadden Arps sent a revised draft of the Memorandum of Understanding to the representatives of Sullivan & Cromwell, which reflected continuing discussions on key terms, including the minimum tender condition, allocation of regulatory risk, termination rights and transaction termination fees.

On April 13, 2015, the Nokia board of directors held an in-person meeting in London, England, where the board of directors was updated on the developments in negotiations with Alcatel Lucent and the transaction timeline.

On April 13, 2015, Alcatel Lucent’s board of directors met in Paris, France, at the offices of Sullivan & Cromwell and by video conference. The meeting was also attended by members of Alcatel Lucent’s senior management and representatives from Zaoui and Sullivan & Cromwell. Alcatel Lucent’s board of directors evaluated the terms of the proposed transaction, including the exchange ratio and terms of the draft Memorandum of Understanding. Members of Alcatel Lucent’s senior management updated Alcatel Lucent’s board of directors on developments with respect to the proposed acquisition of Alcatel Lucent by Nokia since the previous meeting of the board, including the conclusions of the reciprocal due diligence and valuation exercises carried out by Alcatel Lucent in respect of Nokia. Zaoui and Sullivan & Cromwell reviewed the financial and legal terms of the Memorandum of Understanding, based on an advanced draft of the Memorandum of Understanding. Zaoui explained the financial terms of the Exchange Offer and the potential impact on the holders of Alcatel Lucent Shares and OCEANEs, including the premium implied by the exchange ratio and considerations regarding valuation of Alcatel Lucent and Nokia. Sullivan & Cromwell also discussed the fiduciary duties of Alcatel Lucent’s board of directors in considering the Memorandum of Understanding and the timetable of the proposed transaction.

On April 13, 2015, rumors of a possible offer or transaction by Nokia to acquire Alcatel Lucent’s wireless business were publicly reported, following rumors of the potential sale of HERE by Nokia on April 10, 2015.

On April 14, 2015, in response to the rumors, Nokia and Alcatel Lucent issued a joint public announcement prior to the open of markets in Europe confirming that they were in advanced discussions with respect to a potential full combination, which would take the form of a public exchange offer by Nokia for Alcatel Lucent.

On April 14, 2015, representatives of Nokia, including Timo Ihamuotila and Maria Varsellona, and representatives of J.P. Morgan and Skadden Arps met with representatives of Alcatel Lucent, including Jean Raby and Remi Thomas, and the representatives of Zaoui and Sullivan & Cromwell, in Paris, France, at the offices of Skadden Arps to finalize the remaining terms of the Memorandum of Understanding, including agreement on the size of the termination fees.

On April 14, 2015, the Nokia board of directors held a conference call meeting, where it resolved to approve the proposed acquisition of Alcatel Lucent and the execution of the Memorandum of Understanding.

On April 14, 2015, Alcatel Lucent’s board of directors held a conference call meeting, which was also attended by representatives of Alcatel Lucent’s senior management, Zaoui and Sullivan & Cromwell. Management provided an update on discussions with Nokia since the previous board meeting, while

 

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Zaoui and Sullivan & Cromwell reviewed the final financial and legal terms of the Memorandum of Understanding. Zaoui delivered to Alcatel Lucent’s board of directors its oral opinion, which was confirmed by delivery of a written opinion dated April 14, 2015, to the effect that, as of such date and based upon and subject to the assumptions made, procedures followed, matters considered, and qualifications and limitations described in its written opinion, the exchange ratio proposed to be paid to the holders (other than Nokia and its affiliates) of Alcatel Lucent Shares, including Alcatel Lucent ADSs, pursuant to the Exchange Offer was fair from a financial point of view to such holders, as further described under the section entitled “—Opinions of Alcatel Lucent’s Financial Advisor” below. The opinion delivered by Zaoui is attached as Annex B-I to this exchange offer/prospectus. Following additional discussion and consideration of the Memorandum of Understanding and the terms and conditions of the Exchange Offer, the Alcatel Lucent board of directors unanimously approved the terms of the Memorandum of Understanding and the draft press release announcing the transaction.

On April 15, 2015, Nokia and Alcatel Lucent executed the Memorandum of Understanding.

On April 15, 2015, prior to the open of markets in Europe, Nokia and Alcatel Lucent jointly announced the execution of the Memorandum of Understanding and the proposed acquisition of Alcatel Lucent by Nokia by way of an exchange offer by Nokia for all outstanding equity securities of Alcatel Lucent.

After the announcement of the execution of the Memorandum of Understanding, Alcatel Lucent promptly began the information process of its French Group Committee (Comité de Groupe France) in order to obtain its opinion on the proposed public exchange offer. Between April 15, 2015 and June 1, 2015, Alcatel Lucent, with Nokia’s participation, held a series of meetings with the French Group Committee and responded to its information and other requests. The consultations were conducted in accordance with Article L. 2323-23 of the French Labor Code and French practice. On June 1, 2015, Alcatel Lucent’s French Group Committee delivered its opinion, indicating that it does not oppose the proposed acquisition of Alcatel Lucent by Nokia.

On June 4, 2015, further to the French Group Committee consultation process, Alcatel Lucent’s board of directors expressed its full support for the proposed combination with Nokia. The opinion of the French Group Committee is included as part of Alcatel Lucent’s offer response document approved by the AMF on November 12, 2015 in response to the French Offer Documentation filed by Nokia and approved by the AMF on the same day.

In addition, following the execution of the Memorandum of Understanding, Nokia and Alcatel Lucent promptly began the filings and regulatory review processes in all relevant jurisdictions necessary for the consummation and implementation of the Exchange Offer and the combination of the businesses of Nokia and Alcatel Lucent. As of the date hereof, all material regulatory approvals for the Exchange Offer have been received. Refer to the section entitled “The Exchange Offer—Legal Matters; Regulatory Approvals” for further discussion of the applicable regulatory approvals.

On October 22, 2015, the board of directors of Nokia approved the submission of the French Offer with the AMF.

On October 28, 2015, the participating members of the Alcatel Lucent board of directors, as a result of the matters described in “The Transaction—Reasons for the Alcatel Lucent Board of Directors’ Approval of the Transaction”, unanimously:

 

(i)

determined that the Exchange Offer is in the best interest of Alcatel Lucent, its employees and its stakeholders (including holders of Alcatel Lucent Shares and holders of other Alcatel Lucent Securities),

 

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(ii)

recommended that all holders of Alcatel Lucent Shares and holders of Alcatel Lucent ADSs tender their Alcatel Lucent Shares and/or their Alcatel Lucent ADSs pursuant to the Exchange Offer and

 

(iii)

recommended that all holders of OCEANEs tender their OCEANEs pursuant to the Exchange Offer.

We expect to file the Schedule TO with the SEC and to commence the U.S. Offer on November 18, 2015.

Disclosure of Certain Information Relating to Alcatel Lucent

Prior to the signing of the Memorandum of Understanding, Nokia had access to certain limited information about Alcatel Lucent and its subsidiaries for purposes of conducting its due diligence review and Alcatel Lucent had access to certain limited information about Nokia. The significant elements of such information are contained in the Alcatel Lucent 2014 Form 20-F or the Nokia 2014 Form 20-F, as applicable.

Nokia considers that apart from the publicly available information or the information contained in this exchange offer/prospectus, it has not received specific information relating to, directly or indirectly, Alcatel Lucent and its subsidiaries and which would be likely, if made public, to have a significant influence on the share price of Alcatel Lucent Securities.

Reasons for the Exchange Offer

We believe that the combination of Nokia’s and Alcatel Lucent’s businesses will create significant value for stakeholders of both companies. Following the Completion of the Exchange Offer, Nokia will be well-positioned to create the foundation of seamless connectivity for people and things wherever they are. We believe that this foundation is essential for enabling the next wave of technological change, including the Internet of Things and transition to the cloud.

The strategic rationale for combining the two companies includes:

 

•

creation of end-to-end portfolio scope and scale player with leading global positions across products, software and services to meet changing industry paradigms;

 

•

complementary offerings, customers and geographic footprint;

 

•

enhanced research and development capabilities creating an innovation powerhouse with significant combined R&D resources;

 

•

the recent execution track-record on both sides and common vision for the future;

 

•

the opportunity to realize significant cost savings and other synergies; and

 

•

the development of a robust capital structure and strong balance sheet.

End-to-end portfolio scope and scale player with leading global positions across products, software and services to meet changing industry paradigms

The driver of the changes we are seeing in the world around us and the demands being placed on the networks of the future are increasingly complex. Demand for seamless and ubiquitous access is combining with ever-increasing requirements for network analytics and network intelligence. We believe that this is requiring broader, deeper, and more sophisticated end-to-end capabilities, which very few companies can offer.

The growing complexity of product demands are set against a number of other shifting industry paradigms. Customer consolidation has been ongoing for a number of years now and has created fewer, larger players with broader global needs. Convergence is happening rapidly across both fixed

 

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and mobile, as well as IP and cloud. Virtualization is leading to increased network efficiency and scalability. Furthermore, web scale companies and certain large enterprise verticals are growing as a customer base for carrier-grade technologies

Combining Nokia with Alcatel Lucent will bring together the complementary capabilities of both companies with an end-to-end portfolio of software, services and products, which will be weighted towards next-generation technologies enabling us to provide better solutions to customers and access new opportunities in an expanded, addressable market.

Following the Completion of the Exchange Offer, the combined company is expected to be a leader in technologies such as fixed broadband, LTE, IP routing, cloud applications and advanced analytics, positioning the company as either the number one or two player in most key business areas. We expect to have the scale to service the very largest global multinational customers with a broader range of products, software and services across a wider geographic footprint, which we believe will make us the strategic partner of choice for the long term. We believe that the Exchange Offer provides a very compelling path to achieving and accelerating the long term strategies vision that Nokia has laid out in its 10-year strategy to be a global technology leader in the programmable world.

Complementary offerings, customers and geographic footprint

The Exchange Offer brings together two businesses which we believe have highly complementary portfolios and geographies, bringing together the best of fixed and mobile, IP routing, core networks, cloud applications and services. Together, Nokia and Alcatel Lucent will have particular strength in the United States, China, Europe and Asia-Pacific. We believe that the combined company will be positioned to target a larger addressable market with an improved growth profile. Based on our estimates, the addressable market of the combined company in 2014 was approximately 50% larger than the current addressable networks market for Nokia alone, increasing from approximately EUR 84 billion to approximately EUR 130 billion. Based on Nokia’s internal estimates, the combined company is expected to have a stronger growth profile than Nokia’s current addressable market, and we estimate, based on our internal data, that the addressable market of the combined company would enjoy a Compound Annual Growth Rate (“CAGR”) of approximately 3.5% for 2014-2019.

Enhanced research and development capabilities creating an innovation powerhouse with significant combined R&D resources

The combined company will have significant innovation capabilities, with Alcatel Lucent’s Bell Labs and Nokia’s FutureWorks, as well as Nokia Technologies. The latter is expected to stay as a separate entity with a clear focus on licensing and the incubation of new technologies.

With more than 40 000 research and development employees, of which over 30 000 are software engineers, and combined 2014 research and development spending of EUR 4.7 billion, the combined company will be well positioned to accelerate development of future technologies including 5G, IP and software-defined networking, cloud and analytics, as well as digital health and digital media, bringing significant benefits to its customers.

The recent execution track-record on both sides and common vision for the future

We believe that both companies are in a far better position to combine at this point in time and the combination is being conducted from a position of strength. Both companies have recently improved their operational efficiency and agility through significant restructurings, Nokia has purchased Siemens share of Nokia Siemens Network, divested substantially all of its Devices & Services business to Microsoft and has announced the pending disposal of our HERE digital mapping and location services business, while Alcatel Lucent is coming to the end of the Shift plan.

 

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Through its restructuring program, Nokia became a leader in Mobile Broadband while strengthening its financial position and having achieved one of the industry-leading profitabilities. Similarly, Alcatel Lucent has rebuilt its capital base through refinancings and divestments and refocused on IP Networking, Cloud and Ultra Broadband, leading to Alcatel Lucent’s improvement in profitability and free cash flow. We expect to build on these learnings to make the expected integration of Nokia and Alcatel Lucent as seamless as possible.

Both companies share a common vision for the future, and believe that this transaction is the next logical step of our successful transformations and at the right time for both companies. Following the Completion of the Exchange Offer, Nokia is expected to be well positioned to create the foundation of seamless connectivity which we believe is essential for enabling the next wave of technological change in our industry.

The opportunity to realize significant cost savings and other synergies

The combined company would target approximately EUR 900 million of annual operating cost synergies to be achieved on a full year basis in 2018, relative to the combined non-IFRS projected results of Nokia and Alcatel Lucent for the full year 2015, and assuming Completion of the Exchange Offer in the first quarter 2016.

The combined company would also target approximately EUR 200 million of reductions in interest expenses to be achieved on a full-year basis in 2017. The transaction is expected to be accretive to Nokia earnings on a non-IFRS basis (excluding restructuring charges and amortization of intangibles) in 2017. This target assumes Completion of the Exchange Offer no later than the end of the first half of 2016.

The development of a robust capital structure and strong balance sheet

The combined company will benefit from enhanced financial resources for growth and investment purposes. The combined company is expected to have a strong balance sheet, which will support our ambition to re-establish our long-term investment-grade rating. Assuming conversion of all OCEANEs and completion of the sale of our HERE business, the pro forma net cash position of the combined company at June 30, 2015 would have been EUR 8.1 billion and pro forma cash and cash equivalents of the combined company at June 30, 2015 would have been EUR 10.5 billion. Net cash is a non-IFRS financial measure. Refer to “Selected Unaudited Pro Forma Combined Financial Information” for a description of how we define and calculate net cash. Following the Completion of the Exchange Offer, Nokia intends implement capital structure optimization program for the combined group (See “The Transaction—Intentions of Nokia over the next twelve months—Capital structure optimization program”).

Reasons for the Alcatel Lucent Board of Directors’ Approval of the Transaction

Reasons for Approving the Memorandum of Understanding

On April 13, 2015, Alcatel Lucent’s board of directors met in Paris, France, at the offices of Sullivan & Cromwell and by video conference. The meeting was also attended by members of Alcatel Lucent’s senior management and representatives from Zaoui and Sullivan & Cromwell. Alcatel Lucent’s board of directors evaluated the terms of the proposed transaction, including the exchange ratio and terms of the draft Memorandum of Understanding. Members of Alcatel Lucent’s senior management updated Alcatel Lucent’s board of directors on developments with respect to the proposed acquisition of Alcatel Lucent by Nokia since the previous meeting of the board, including the conclusions of the reciprocal due diligence and valuation exercises carried out by Alcatel Lucent in respect of Nokia. Zaoui and Sullivan & Cromwell reviewed the financial and legal terms of the Memorandum of Understanding, based on an advanced draft of the Memorandum of Understanding. Zaoui explained the financial terms

 

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of the Exchange Offer and the potential impact on the holders of Alcatel Lucent Shares and OCEANEs, including the premium implied by the exchange ratio and considerations regarding valuation of Alcatel Lucent and Nokia. Sullivan & Cromwell also discussed the fiduciary duties of Alcatel Lucent’s board of directors in considering the Memorandum of Understanding and the timetable of the proposed transaction.

On April 14, 2015, Alcatel Lucent’s board of directors held a meeting, which was also attended by members of Alcatel Lucent’s senior management and representatives from Zaoui and Sullivan & Cromwell, to consider the final financial and legal terms of and entry into the Memorandum of Understanding. At this meeting, Alcatel Lucent’s board of directors was briefed on the final terms of the Memorandum of Understanding by Sullivan & Cromwell and Zaoui. Zaoui delivered to Alcatel Lucent’s board of directors its oral opinion, which was confirmed by delivery of a written opinion dated April 14, 2015, to the effect that, as of such date and based upon and subject to the assumptions made, procedures followed, matters considered, and qualifications and limitations described in its written opinion, the exchange ratio proposed to be paid to the holders (other than Nokia and its affiliates) of Alcatel Lucent Shares, including Alcatel Lucent ADSs, pursuant to the Exchange Offer was fair from a financial point of view to such holders, as further described in the section entitled “—Opinion of Alcatel Lucent’s Financial Advisor”. The full text of Zaoui’s written opinion dated April 14, 2015, which sets forth a description of the assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Zaoui in preparing its opinion, is attached as Annex B-1 to this exchange offer/prospectus. Following additional discussion and consideration of the Memorandum of Understanding and the terms and conditions of the Exchange Offer, Alcatel Lucent’s board of directors unanimously approved the terms of the Memorandum of Understanding.

In evaluating the Memorandum of Understanding and the transactions contemplated thereby, including the Exchange Offer, Alcatel Lucent’s board of directors consulted with Alcatel Lucent’s senior management, as well as Zaoui, which was retained by Alcatel Lucent as financial advisor in connection with the Exchange Offer. Alcatel Lucent’s board of directors resolved to approve the Memorandum of Understanding on the basis of numerous factors, including the following non-exhaustive list of material factors and benefits of the Memorandum of Understanding and the Exchange Offer, each of which Alcatel Lucent’s board of directors believed supported its unanimous determination to approve the Memorandum of Understanding.

 

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Premium of Exchange Ratio Over Alcatel Lucent Shares Trading Price. Alcatel Lucent’s board of directors considered that, based on the closing share price of Nokia Shares (on Nasdaq Helsinki) of EUR 7.77 on April 13, 2015, as further described in the section entitled “—Background of the Exchange Offer”, the exchange ratio offered an equivalent of EUR 4.27 per Alcatel Lucent Share (or EUR 4.48 per Alcatel Lucent Share on a fully diluted basis), and valued Alcatel Lucent at EUR 15.6 billion on a fully diluted basis, corresponding to:

 

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a premium to holders of Alcatel Lucent Shares of 11% and a fully diluted premium of 16%, in each case based on the closing price of Alcatel Lucent Shares (on Euronext Paris) as of April 13, 2015;

 

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a premium to holders of Alcatel Lucent Shares of 18% and a fully diluted premium of 24%, in each case based on the weighted average price of Alcatel Lucent Shares (on Euronext Paris) for the period beginning March 16, 2015 and ending April 13, 2015;

 

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a premium to holders of Alcatel Lucent Shares of 28% and a fully diluted premium of 34%, in each case based on the weighted average price of Alcatel Lucent Shares (on Euronext Paris) for the period beginning January 14, 2015 and ending April 13, 2015;

 

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a premium to holders of Alcatel Lucent Shares of 48% and a fully diluted premium of 55%, in each case based on the weighted average price of Alcatel Lucent Shares (on Euronext Paris) for the period beginning October 14, 2014 and ending April 13, 2015; and

 

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a premium to holders of Alcatel Lucent Shares of 54% and a fully diluted premium of 61%, in each case based on the weighted average price of Alcatel Lucent Shares (on Euronext Paris) for the period beginning April 11, 2014 and ending April 13, 2015.

The fully diluted premiums above reflect the implied premium paid by Nokia to Alcatel Lucent’s market capitalization, based on volume weighted average price of Alcatel Lucent Shares over the referenced period, as adjusted for the dilutive effect of the OCEANEs, which represent a substantial portion of Alcatel Lucent Shares on a fully diluted basis.

 

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Premium Over Historical Exchange Ratio. Alcatel Lucent’s board of directors considered that the exchange ratio of 0.5500 represented a premium to the historical average ratios of the volume weighted average price of Alcatel Lucent Shares to the volume weighted average price of Nokia over various periods, in particular:

 

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a premium to holders of Alcatel Lucent Shares of 11% and a fully diluted premium of 16% to the historical exchange ratio of 0.497, based on the closing price of Alcatel Lucent Shares (on Euronext Paris) and Nokia Shares (on Nasdaq Helsinki) as of April 13, 2015;

 

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a premium to holders of Alcatel Lucent Shares of 11% and a fully diluted premium of 16% to the historical exchange ratio of 0.497, based on the weighted average price of Alcatel Lucent Shares (on Euronext Paris) and Nokia Shares (on Nasdaq Helsinki), in each case for the period beginning March 16, 2015 and ending April 13, 2015;

 

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a premium to holders of Alcatel Lucent Shares of 16% and a fully diluted premium of 21% to the historical exchange ratio of 0.475, based on the weighted average price of Alcatel Lucent Shares (on Euronext Paris) and Nokia Shares (on Nasdaq Helsinki), in each case for the period beginning January 14, 2015 and ending April 13, 2015;

 

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a premium to holders of Alcatel Lucent Shares of 28% and a fully diluted premium of 35% to the historical exchange ratio of 0.428, based on the weighted average price of Alcatel Lucent Shares (on Euronext Paris) and Nokia Shares (on Nasdaq Helsinki), in each case for the period beginning October 14, 2014 and ending April 13, 2015; and

 

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a premium to holders of Alcatel Lucent Shares of 27% and a fully diluted premium of 33% to the historical exchange ratio of 0.435, based on the weighted average price of Alcatel Lucent Shares (on Euronext Paris) and Nokia Shares (on Nasdaq Helsinki), in each case for the period beginning April 11, 2014 and ending April 13, 2015.

The fully diluted premiums above reflect the implied premium paid by Nokia to Alcatel Lucent’s market capitalization, based on volume weighted average price of Alcatel Lucent Shares over the referenced period, as adjusted for the dilutive effect of the OCEANEs, which represent a substantial portion of Alcatel Lucent Shares on a fully diluted basis.

 

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Implied Premium on a Fully Diluted Basis. Alcatel Lucent’s board of directors considered the premium implied by the exchange ratio on a fully diluted basis taking into account the Alcatel Lucent Shares issuable upon exercise of Alcatel Lucent Stock Options, vesting of Performance Shares and conversion/exchange of OCEANEs (including the effect of the Exchange Offer on the terms of the OCEANEs). In particular, Alcatel Lucent’s board of directors considered that the opening of the Exchange Offer will result in an adjustment to the conversion/exchange ratio of each series of OCEANEs. Alcatel Lucent’s board of directors also considered that the 2019 OCEANEs and the 2020 OCEANEs, as a result of the adjustment to the conversion/exchange ratio of each series and taking into account that the exchange ratio offered an equivalent of EUR 4.27 per Alcatel Lucent Share, based on the closing price of Nokia Shares of EUR 7.77 on April 13, 2015, had an implied value upon conversion/exchange in excess of their respective principal amounts. Alcatel Lucent’s board of directors considered that, as a result of the fixed exchange ratio, a greater number of Nokia Shares would be issuable to holders of Alcatel Lucent Securities on a fully diluted basis than

 

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the number of Nokia Shares that would be issuable without taking these factors into account. Alcatel Lucent’s board of directors also considered that subsequent changes in the price of Alcatel Lucent Shares or Nokia Shares may affect the decision of holders of OCEANEs to convert/exchange their OCEANEs into Alcatel Lucent Shares or to tender their OCEANEs into the Exchange Offer, which could have a corresponding impact on the number of Nokia Shares actually issued to holders of Alcatel Lucent Securities upon Completion of the Exchange Offer. Alcatel Lucent’s board of directors considered that fully diluted premiums provided a meaningful assessment of the premium implied by the exchange ratio. For an explanation of the calculation of fully diluted premium, based on the closing price of Nokia Shares of EUR 7.77 on April 13, 2015, reference is made to Appendix 1 of the Announcement Press Release that is included as Annex 1 to the Memorandum of Understanding.

 

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Negotiation Process and Procedural Fairness. Alcatel Lucent’s board of directors considered the fact that the terms of the Memorandum of Understanding and the Exchange Offer were the result of robust arm’s-length negotiations conducted by Alcatel Lucent, with the knowledge and at the direction of Alcatel Lucent’s board of directors, and with the assistance of its financial and legal advisors. Alcatel Lucent’s board of directors believed that, as a result of such process, it has obtained Nokia’s best and final offer, and that, as of the date of the Memorandum of Understanding, the exchange ratio represented the highest implied consideration per Alcatel Lucent Share reasonably obtainable.

 

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Business and Financial Condition of Alcatel Lucent. Alcatel Lucent’s board of directors considered the current and historical financial condition, results of operations, business, competitive position, properties, assets and prospects of Alcatel Lucent. Alcatel Lucent’s board of directors evaluated, based on their knowledge of and their familiarity with Alcatel Lucent’s business, financial condition and results of operations, Alcatel Lucent’s financial plan and prospects of Alcatel Lucent if it were to remain independent. Alcatel Lucent’s board of directors considered Alcatel Lucent’s current financial plan, including the risks associated with achieving and executing upon Alcatel Lucent’s business plans, as well as the industry, economic and market conditions and trends in the markets and competitive environment in which Alcatel Lucent operates.

 

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Business and Financial Condition of Nokia. Alcatel Lucent’s board of directors considered, based on the diligence exercise conducted, the current and historical financial condition, results of operations, business, competitive position, properties, assets and prospects of Nokia, as well as the industry, economic and market conditions and trends in the markets and competitive environment in which Nokia operates.

 

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Strategic Alternatives. Alcatel Lucent’s board of directors considered potential alternatives to the Exchange Offer, including the possibility that Alcatel Lucent would continue to operate as an independent entity, the potential benefits to the holders of Alcatel Lucent Securities of these alternatives and the timing and likelihood of successfully completing such alternatives, as well as the belief of Alcatel Lucent’s board of directors that none of these alternatives was reasonably likely to create greater value for the holders of Alcatel Lucent Securities taking into account risks of execution as well as business, competitive, industry and market risks. Alcatel Lucent’s board of directors also considered the fact that Alcatel Lucent had actively explored transactions other than the Exchange Offer with other market participants as described in the section entitled “—Background of the Exchange Offer” of this exchange offer/prospectus.

 

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Participation in the Future of the Combined Businesses. Alcatel Lucent’s board of directors considered that the combination of the businesses will continue to offer holders of Alcatel Lucent Securities who participate in the Exchange Offer and receive Nokia Shares or Nokia ADSs would have the opportunity to participate in any future earnings or growth of the combined businesses of Alcatel Lucent and Nokia and benefit from any potential future appreciation in the value of the Nokia Shares or Nokia ADSs. In particular, Alcatel Lucent’s

 

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board of directors considered the following factors in relation to participation of holders of Alcatel Lucent Securities in the future of the combined businesses:

 

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a combination of the businesses of Nokia and Alcatel Lucent would offer a unique opportunity to create a European champion and global leader in ultra-broadband, IP networking and cloud applications and provide a platform to accelerate Alcatel Lucent’s strategic vision, with the financial strength and critical scale needed to develop the next generation of network technology, including 5G;

 

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the combined businesses would be expected to have strong innovation capabilities, with Alcatel Lucent’s Bell Labs and Nokia’s FutureWorks, as well as Nokia Technologies, which Nokia stated would remain as a separate entity with a clear focus on licensing and the incubation of new technologies, and with more than 40,000 R&D employees and investment of EUR 4.7 billion in R&D in 2014, the combined businesses would 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;

 

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Alcatel Lucent and Nokia also have highly complementary portfolios and geographies, with particular strength in the United States, China, Europe and Asia-Pacific, and would be expected to bring together complementary strengths in fixed and mobile broadband, IP routing, core networks, cloud applications and services;

 

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the combined businesses would be positioned to target a larger addressable market with an improved growth profile as compared to Alcatel Lucent as a standalone business, and the belief of Alcatel Lucent’s board of directors that consumers are increasingly seeking to access data, voice and video across networks, creating an environment in which technology that used to operate independently now needs to work together, and the belief of Alcatel Lucent’s board of directors that the combined businesses would be well-placed to assist telecom operators, internet providers and other large enterprises address this challenge;

 

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the combination of the businesses of Alcatel Lucent and Nokia would target approximately EUR 900 million of full-year operating cost synergies within three years, assuming closing of the transaction in the first half of 2016, in a wide range of areas, including (i) organizational streamlining, rationalization of overlapping products and services, central functions, and regional and sales organizations; (ii) reduction of various overhead costs in real estate, manufacturing and supply-chain, information technology and overall general and administrative expenses, including redundant public company costs; (iii) procurement given expanded purchasing requirements of the combined businesses; and (iv) R&D efficiencies, particularly in wireless;

 

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the combined businesses would also target reductions in interest expenses of approximately EUR 200 million to be achieved on a full year basis in 2017, with the Exchange Offer expected to be accretive to Nokia earnings on a non-IFRS basis (excluding restructuring charges and amortization of intangibles) in 2017;

 

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the combined businesses would be expected to have a strong balance sheet;

 

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Nokia has stated its intention to maintain its long term target to return to an investment grade credit rating and manage the combined capital structure accordingly by retaining significant gross and net cash positions and by proactively reducing indebtedness, including through exercise of an early repayment option for its EUR 750 million convertible bond in the fourth quarter of 2015, which is expected to result in the full conversion of this convertible bond to equity prior to the closing of the Exchange Offer, with no expected cash outflow;

 

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although Nokia has stated that it has suspended its capital structure optimization program, including suspending the share repurchase program execution, effective

 

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immediately, until the Completion of the Exchange Offer, it has also indicated that it intends to evaluate the resumption of a capital structure optimization program for the combined businesses of Alcatel Lucent and Nokia;

 

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Nokia’s statement that Nokia Technologies, a source of innovation, expertise and intellectual property, would not be impacted by the Exchange Offer and will remain as a separate entity with a clear focus on incubating new technologies and sharing those technologies through an active licensing program; and

 

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the combined businesses of Alcatel Lucent and Nokia, would be expected to have increased scale and scope in a variety of dimensions, including increased financial scale, greater diversification of markets, and a larger product portfolio than Alcatel Lucent alone, thereby diversifying certain of the risks associated with holding Alcatel Lucent Securities alone.

 

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Opinion of Alcatel Lucent’s Financial Advisor. Alcatel Lucent’s board of directors considered the oral opinion of Zaoui delivered to it on April 14, 2015, which was confirmed by delivery of a written opinion dated April 14, 2015, to the effect that, as of such date and based upon and subject to the assumptions made, procedures followed, matters considered, and qualifications and limitations described in its written opinion, the exchange ratio proposed to be paid to the holders (other than Nokia and its affiliates) of Alcatel Lucent Shares, including Alcatel Lucent ADSs, pursuant to the Exchange Offer was fair from a financial point of view to such holders, as further described in the section entitled “—Opinion of Alcatel Lucent’s Financial Advisor”. The full text of Zaoui’s written opinion dated April 14, 2015, which sets forth a description of the assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Zaoui in preparing its opinion, is attached as Annex B-1 to this exchange offer/prospectus.

 

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Due Diligence. Alcatel Lucent’s board of directors considered the scope of the due diligence investigation of Nokia conducted by Alcatel Lucent’s management, including (i) several days of reciprocal business due diligence sessions attended by representatives of Alcatel Lucent and Nokia, (ii) a detailed review of Nokia’s financial statements with the assistance of outside advisors, (iii) dedicated diligence sessions on the strategy and operations of HERE and Nokia Technologies and (iv) the responses to diligence requests provided by representatives of Nokia in further management presentations or discussions with representatives of Alcatel Lucent responses;

 

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Employee Matters and French Commitments. Alcatel Lucent’s board of directors considered that Nokia has stated that it intends to maintain employment in France that is consistent with Alcatel Lucent’s end-2015 Shift Plan commitments, with a particular focus on the key sites of Villarceaux (Essonne) and Lannion (Côtes d’Armor). In addition, Nokia has stated that it expects to expand R&D employment with the addition of several hundred new positions targeting recent graduates with skills in future-oriented technologies, including 5G, to ensure ongoing support for customers, activities for support services, and that pre- and post-sales are expected to continue as well.

 

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Governance of Nokia. Alcatel Lucent’s board of directors considered Nokia’s intention for the combined business following Completion of the Exchange Offer to include a leadership team built on strengths of both Nokia and Alcatel Lucent and the commitment by Nokia pursuant to the Memorandum of Understanding for the Corporate Governance & Nomination committee of Nokia’s board of directors and Alcatel Lucent to jointly identify three nominees to Nokia’s board of directors. Alcatel Lucent’s board of directors considered that the election of these director nominees would be subject to a Completion of the Exchange Offer and the approval at Nokia’s extraordinary general meeting by Nokia shareholders representing at least a majority of the votes cast.

 

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Likelihood of Completion. Alcatel Lucent’s board of directors considered its belief that the Exchange Offer will likely be completed, based on, among other factors:

 

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the absence of any financing condition to Completion of the Exchange Offer, given the consideration is payable in Nokia Shares;

 

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the fact that the conditions to the commencement and Completion of the Exchange Offer are specific and limited in scope;

 

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its expectation that required regulatory and antitrust approvals would be obtained within a reasonable timeframe; and

 

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Alcatel Lucent’s ability under the Memorandum of Understanding to pursue damages in certain circumstances.

 

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Termination Fees Payable by Nokia. Alcatel Lucent’s board of directors considered that the Memorandum of Understanding may require Nokia to pay termination fees to Alcatel Lucent in the event the Memorandum of Understanding is terminated under specified circumstances, including:

 

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a termination fee of EUR 150 million for termination by Alcatel Lucent or Nokia for the failure of Nokia to obtain the Nokia Shareholder Approval;

 

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a termination fee of EUR 300 million for termination by Alcatel Lucent for (i) a Nokia Change in Board Recommendation or (ii) a material breach by Nokia of certain obligations under the Memorandum of Understanding and Nokia having taken deliberate action to frustrate the Nokia Shareholder Approval;

 

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a termination fee of EUR 100 million for termination by Alcatel Lucent for failure to receive the required foreign investment approval in France; and

 

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a termination fee of EUR 400 million for termination by Alcatel Lucent or Nokia for failure to receive certain required regulatory and antitrust approvals, other than the foreign investment approval in France, or as a result of an injunction or law prohibiting the Exchange Offer.

Alcatel Lucent’s board of directors considered that the amount of the termination fees that may be payable by Nokia were comparable to fees in transactions of a similar size, including transactions in the European market, were reasonable in light of the circumstances, were likely to encourage Nokia to comply with the terms of the Memorandum of Understanding and promote the Completion of the Exchange Offer. Alcatel Lucent’s board of directors also considered provisions regarding the possible limitations on Nokia’s payment of termination fees as a result of such fees being found unlawful or unenforceable. Alcatel Lucent’s board of directors also recognized that the provisions in the Memorandum of Understanding relating to these termination fees and the amounts of such termination fees were determined following robust arm’s-length negotiations.

 

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Other Terms of the Memorandum of Understanding. Alcatel Lucent’s board of directors considered the other terms of the Memorandum of Understanding, which are more fully described in the section entitled “The Memorandum of Understanding”. Certain other terms of the Memorandum of Understanding that Alcatel Lucent’s board of directors considered important included:

 

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Minimum Tender Condition. Completion of the Exchange Offer is conditioned on the satisfaction of the Minimum Tender Condition, which, if satisfied, would demonstrate strong support for the Exchange Offer by holders of Alcatel Lucent Securities because satisfaction of the Minimum Tender Condition would require that at least a majority of Alcatel Lucent Shares (calculated on a fully-diluted basis) would have been tendered in

 

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the Exchange Offer and not withdrawn. Alcatel Lucent’s board of directors also considered that the Minimum Tender Condition, as a result of being determined by a majority of Alcatel Lucent Shares (calculated on a fully-diluted basis), was more likely to be satisfied than a higher threshold and more likely to provide certainty to holders of Alcatel Lucent Securities that Nokia would complete the Exchange Offer. Alcatel Lucent’s board therefore viewed the Minimum Tender Condition as preferable to potentially higher minimum levels for tenders in the Exchange Offer. Alcatel Lucent’s board of directors also considered that Nokia would have the ability to waive potentially higher minimum levels for tenders in the Exchange Offer and have greater optionality in respect of Completion of the Exchange Offer. Alcatel Lucent’s board of directors considered that, subject to applicable SEC and AMF rules and regulations, Nokia reserves the right, in its sole discretion, to waive the Minimum Tender Condition, but cannot waive the Mandatory Minimum Acceptance Threshold.

 

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Ability to Respond to Certain Unsolicited Alternate Proposals. If at any time Alcatel Lucent receives a bona fide written Alternate Proposal or any written request for non-public information or inquiry relating to Alcatel Lucent by any person or group of persons who has or is expected to make any bona fide written Alternate Proposal, in each case that Alcatel Lucent’s board of directors determines in good faith constitutes or is reasonably likely to lead to a Superior Proposal, Alcatel Lucent may engage or otherwise participate in any discussions or negotiations (including by way of furnishing non-public information or granting access to any of the properties or assets of Alcatel Lucent or its subsidiaries), subject to certain conditions as described in the section entitled “The Memorandum of Understanding—No Solicitation of Alternate Proposals”.

 

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Ability of Alcatel Lucent to Change Board Recommendation in Response to Superior Proposal. At any time, Alcatel Lucent’s board of directors may make a Change in Alcatel Lucent Board Recommendation in response to the receipt of any bona fide written Alternate Proposal that Alcatel Lucent’s board of directors determines in good faith constitutes a Superior Proposal, subject to certain conditions as described in the section entitled “The Memorandum of Understanding—Change in Alcatel Lucent Board Recommendation”. Alcatel Lucent’s board of directors considered that a termination fee of EUR 300 million may be payable by Alcatel Lucent to Nokia following termination of the Memorandum of Understanding by Alcatel Lucent or Nokia for a Change in Alcatel Lucent Board Recommendation in response to a Superior Proposal.

 

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Ability of Alcatel Lucent to Change Board Recommendation in Response to an Alcatel Lucent Intervening Event. At any time prior to the filing of the French Offer with the AMF, Alcatel Lucent’s board of directors may make a Change in Alcatel Lucent Board Recommendation in response to an Alcatel Lucent Intervening Event (as defined in the Memorandum of Understanding), which may result from certain changes that were unknown and not reasonably foreseeable by Alcatel Lucent’s board of directors on the date of the Memorandum of Understanding, subject to certain conditions. Alcatel Lucent’s board of directors considered that a termination fee of EUR 300 million may be payable by Alcatel Lucent to Nokia following termination of the Memorandum of Understanding by Nokia for a Change in Alcatel Lucent Board Recommendation in response to an Alcatel Lucent Intervening Event.

 

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Ability of Alcatel Lucent to Change Board Recommendation in Response to Nokia Material Adverse Effect. At any time after the filing of the French Offer with the AMF and following reasonable notice to Nokia, Alcatel Lucent’s board of directors may make a Change in Alcatel Lucent Board Recommendation in response to a Material Adverse Effect (as defined in the Memorandum of Understanding) with respect to Nokia, if Alcatel

 

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Lucent’s board of directors determines in good faith (after consultation with its outside legal counsel and financial advisors) that its failure to do so would be inconsistent with its fiduciary duties under applicable law.

 

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Standstill. In the event that the Memorandum of Understanding is terminated by Alcatel Lucent for a material breach by Nokia of certain obligations under the Memorandum of Understanding or a Nokia Change in Board Recommendation, then for the longer of (i) 12 months following the date of such termination and (ii) 18 months following the date of the Memorandum of Understanding, Nokia has agreed, subject to certain exceptions, not to acquire or offer to acquire any equity securities of Alcatel Lucent.

 

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Long-Stop Date. Alcatel Lucent’s board of directors believed that the long-stop date of the Memorandum of Understanding, which is June 30, 2016 (and which may be extended to September 30, 2016 in certain circumstances), allows for sufficient time to file the French Offer while minimizing the length of time that Alcatel Lucent would be required to operate subject to interim operating covenants.

 

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Cooperation. Nokia has agreed to cooperate with Alcatel Lucent and to use its reasonable best efforts to cause the Conditions to the Exchange Offer to be satisfied and to launch and complete the Exchange Offer as promptly as reasonably practicable. Nokia has also agreed to use its commercially reasonable best effort to obtain all consents pursuant to contracts to which Alcatel Lucent or its subsidiaries is a party as is reasonably necessary or advisable in connection with the Completion of the Exchange Offer.

 

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Alcatel Lucent Material Adverse Effect. The Memorandum of Understanding excludes certain matters when determining whether a Material Adverse Effect (as defined in the Memorandum of Understanding) has occurred with respect to Alcatel Lucent, the occurrence of which would permit Nokia to terminate the Memorandum of Understanding. The exclusions comprise (i) any change in global, national or regional political conditions (including the outbreak of, or changes in, war, acts of terrorism or other hostilities) or in general global, national or regional economic, regulatory or market conditions or in national or global financial or capital markets, so long as in each case such changes do not disproportionately impact Alcatel Lucent and its subsidiaries relative to other participants in the same or similar industries; (ii) any change in applicable accounting principles or any adoption, implementation or change in any applicable law (including any law in respect of taxes) or any interpretation thereof by a relevant authority; (iii) any change generally affecting similar industries or market sectors in the geographic regions in which Alcatel Lucent and its subsidiaries operate, so long as in each case such changes do not disproportionately impact the Person and its Subsidiaries relative to other participants in the same or similar industries; (iv) the negotiation, execution, announcement or performance of the Memorandum of Understanding or completion of the transactions contemplated thereby; (v) any change or development to the extent resulting from any action by Alcatel Lucent and its subsidiaries that is expressly required to be taken by the Memorandum of Understanding; (vi) any change resulting from or arising out of hurricanes, earthquakes, floods, or other natural disasters; (vii) the failure of Alcatel Lucent and its subsidiaries to meet any internal or public projections, forecasts or estimates of performance, revenues or earnings (it being understood that any change, condition, effect, event or occurrence that caused such failure but that are not otherwise excluded from the definition of Material Adverse Effect may constitute or contribute to a Material Adverse Effect); (viii) the announcement of Nokia as the prospective acquirer of Alcatel Lucent and its subsidiaries or any announcements or communications by or authorized by Nokia regarding Nokia’s plans or intentions with respect to Alcatel Lucent and its subsidiaries (including the impact of any such announcements or communications

 

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on relationships with customers, suppliers, employees or regulators); or (ix) any actions (or the effects of any actions) taken (or omitted to be taken) by Alcatel Lucent and its subsidiaries upon the written request or written instruction of, or with the written consent of, Nokia.

In reaching its determination and recommendation described above, Alcatel Lucent’s board of directors also considered the following potentially negative factors:

 

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Fixed Exchange Ratio. Alcatel Lucent’s board of directors considered the fact that because the consideration for Alcatel Lucent Shares in the Exchange Offer is a fixed exchange ratio of Nokia Shares, holders of Alcatel Lucent Shares could be adversely affected by a decrease in the trading price of the Nokia Shares and the fact that neither the Memorandum of Understanding nor the terms of the Exchange Offer provide for any adjustment of the exchange ratio if the trading price of Nokia Shares decreases or a price-based termination right or other similar protection in favor of Alcatel Lucent or holders of Alcatel Lucent Shares. Alcatel Lucent’s board of directors determined that this structure was appropriate and the risk acceptable in view of the ability of each holder of Alcatel Lucent Securities to choose whether to accept the exchange ratio at the time of the Exchange Offer. Alcatel Lucent’s board of directors also considered the opportunity holders of Alcatel Lucent Shares have as a result of the fixed exchange ratio to benefit from any increase in the trading price of Nokia Shares between the announcement and Completion of the Exchange Offer.

 

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Integration. Alcatel Lucent’s board of directors considered the risk that the potential benefits of the Exchange Offer and the combination of the businesses of Alcatel Lucent and Nokia, including any potential synergies relating to the combination of the businesses of Alcatel Lucent and Nokia, will not be realized or will not be realized within the expected time period and the risks and challenges associated with the integration, including as a result of less than all Alcatel Lucent Securities being acquired by Nokia in the Exchange Offer or any subsequent squeeze-out. Alcatel Lucent’s board of directors considered that, based on the level of diligence conducted by Nokia and the discussions regarding the proposed integration process, the integration of the businesses of Alcatel Lucent and Nokia was reasonably likely to be completed within a reasonable time following the Completion of the Exchange Offer.

 

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Risks the Exchange Offer May Not Be Completed. Alcatel Lucent’s board of directors considered the risk that any of the conditions to the commencement or Completion of the Exchange Offer, including receipt of required regulatory and antitrust approvals, receipt of the Nokia Shareholder Approval and satisfaction of the Minimum Tender Condition, would not be satisfied and that the Exchange Offer may therefore not be completed. In particular, Alcatel Lucent’s board of directors considered that the resolution contemplated by the Nokia Shareholder Approval must be approved by shareholders representing at least two-thirds of the votes cast and Nokia Shares represented at such extraordinary general meeting of Nokia’s shareholders. Alcatel Lucent’s board of directors also considered the risks and costs to Alcatel Lucent if the Exchange Offer is not completed, including the diversion of management and employee attention, potential employee attrition, the potential effect on vendors, distributors, customers, partners and others that do business with Alcatel Lucent and the potential effect on the trading price of Alcatel Lucent Securities. Alcatel Lucent’s board of directors considered its expectation that required regulatory and antitrust approvals would be obtained within a reasonable timeframe, as well as the fact that termination fees may be payable by Nokia to Alcatel Lucent following termination of the Memorandum of Understanding for failure to receive required regulatory or antitrust approvals. Alcatel Lucent’s board of directors also considered that the opening of the Exchange Offer would result in an adjustment to the conversion/exchange ratio of the OCEANEs, and that such adjustment would have a corresponding dilutive effect on other holders of Alcatel Lucent Securities even if the Exchange Offer is not completed.

 

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•

Nokia Shareholder Approval. Alcatel Lucent’s board of directors considered that Nokia’s obligation to accept, and to exchange, any Alcatel Lucent Securities validly tendered into the Exchange Offer would be subject to receipt of the Nokia Shareholder Approval and that there was no guarantee that such approval would be obtained. In particular, Alcatel Lucent’s board of directors considered the fact that the Nokia shareholders meeting would not be called until after all relevant regulatory and antitrust approvals had been received and that the resolution contemplated by the Nokia Shareholder Approval must be approved by Nokia shareholders representing at least two-thirds of the votes cast and Nokia Shares represented at such extraordinary general meeting of Nokia’s shareholders. Alcatel Lucent’s board of directors also considered that a termination fee of EUR 150 million may be payable by Nokia to Alcatel Lucent following termination of the Memorandum of Understanding by Alcatel Lucent or Nokia for failure of Nokia shareholders to approve the authorization for Nokia’s board of directors to issue such number of new Nokia Shares as may be necessary for delivering the Nokia Shares offered in consideration for Alcatel Lucent Securities tendered into the Exchange Offer and for the Completion of the Exchange Offer.

 

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Ability of Nokia to Change Board Recommendation in Response to a Nokia Intervening Event. At any time prior to the Nokia shareholder vote, Nokia’s board of directors may make a Change in Nokia Board Recommendation in response to a Nokia Intervening Event, which may result from certain changes that were unknown and not reasonably foreseeable by Nokia’s board of directors on the date of the Memorandum of Understanding, subject to certain conditions as described in the section entitled “The Memorandum of Understanding—Change in Nokia Board Recommendation”. Alcatel Lucent’s board of directors considered that a termination fee of EUR 300 million may be payable by Nokia to Alcatel Lucent following termination of the Memorandum of Understanding by Alcatel Lucent for a Nokia Change in Board Recommendation in response to a Nokia Intervening Event.

 

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Non-Solicitation Covenant. Alcatel Lucent’s board of directors considered that the Memorandum of Understanding requires Alcatel Lucent not to and to cause its subsidiaries not to and to use its reasonable best efforts to cause its and its subsidiaries’ senior officers, directors or representatives not to solicit alternate proposals from third parties with respect to the purchase of Alcatel Lucent Securities or assets or other business combination transactions. However, based upon Alcatel Lucent’s prior exploration of certain strategic alternatives, as described in the section entitled “—Background of the Exchange Offer” in Schedule 14D-9, Alcatel Lucent’s board of directors believed it had a strong basis for determining that the Exchange Offer was the best transaction reasonably likely to be available to Alcatel Lucent, and that Alcatel Lucent’s board of directors retained the ability to respond to certain unsolicited Alternate Proposals and make a Change in Alcatel Lucent Board Recommendation in response to a Superior Proposal.

 

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Expense Reimbursement and Termination Fees Payable by Alcatel Lucent. Alcatel Lucent’s board of directors considered that the Memorandum of Understanding may require Alcatel Lucent to pay expense reimbursement or termination fees in specified circumstances, including:

 

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an expense reimbursement of up to EUR 40 million for termination by Alcatel Lucent or Nokia in circumstances relating to the Independent Expert Report or Alcatel Lucent French Group Committee process;

 

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an expense reimbursement of EUR 100 million for termination by Alcatel Lucent or Nokia in circumstances relating completion of a second Alcatel Lucent French Group Committee process required as a result of material changes in commitments to the government of France which are materially adverse to Alcatel Lucent’s employees;

 

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•

a termination fee of EUR 300 million for (i) termination by Alcatel Lucent or Nokia for withdrawal of the French Offer following any decision or measure by Alcatel Lucent’s board of directors leading to such withdrawal, (ii) termination by Alcatel Lucent or Nokia following a Change in Alcatel Lucent Board Recommendation in response to a Superior Proposal or (iii) termination by Nokia for a Change in Alcatel Lucent Board Recommendation other than in response to a Superior Proposal or a Material Adverse Effect in respect of Nokia; and

 

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a termination fee of EUR 300 million for termination by Alcatel Lucent or Nokia for failure of the Minimum Tender Condition where (i) there has been a public announcement of an Alternate Proposal, (ii) there has been no Change in Alcatel Lucent Board Recommendation, and (iii) Alcatel Lucent later enters into and completes such Alternate Proposal.

Alcatel Lucent’s board of directors considered that the amount of the expense reimbursement and termination fees were comparable to fees in transactions of a similar size, including transactions in the European market, were reasonable in light of the circumstances and were not likely to deter alternate proposals. Alcatel Lucent’s board of directors also considered provisions regarding the possible limitations on Alcatel Lucent’s payment of termination fees as a result of such fees being found unlawful or unenforceable. Alcatel Lucent’s board of directors also recognized that the provisions in the Memorandum of Understanding relating to these fees were insisted upon by Nokia as a condition to entering into the Memorandum of Understanding, and the amounts were determined following robust arm’s-length negotiations.

 

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Interim Operating Covenants. Alcatel Lucent’s board of directors considered that from the date of the Memorandum of Understanding until the earlier to occur of the Exchange Offer completion date or the termination of the Memorandum of Understanding, Alcatel Lucent has agreed to conduct its business and the business of its subsidiaries in the ordinary course consistent with past practice. The Memorandum of Understanding also imposes restrictions on the conduct of Alcatel Lucent’s business prior to the Completion of the Exchange Offer that may limit Alcatel Lucent and its subsidiaries from taking specified actions, which may delay or prevent Alcatel Lucent from undertaking business opportunities that may arise pending Completion of the Exchange Offer including in respect of issuances, sales and disposals of Alcatel Lucent Securities, incurrence of indebtedness, creation of liens, sales or disposals of assets, settlement of litigation, amendment or termination of material contracts, entry into non-competes that would restrict the business of Nokia or materially restrict the business of Alcatel Lucent and maintenance of intellectual property rights.

 

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Potential Conflicts of Interest. Alcatel Lucent’s board of directors considered the potential conflict of interest created by the fact that Alcatel Lucent’s directors and executive officers may have financial interests in the transactions contemplated by the Memorandum of Understanding, including the Exchange Offer, that may be different from or in addition to those of other holders of Alcatel Lucent Securities, as described in the section entitled “Item 3. Past Contacts, Transactions, Negotiations and Agreements” in Schedule 14D-9 filed by Alcatel Lucent with the SEC.

In the course of reaching its determination to approve the Memorandum of Understanding and the transactions contemplated thereby, including the Exchange Offer, Alcatel Lucent’s board of directors considered numerous factors, including the factors specified in the foregoing discussion, and Alcatel Lucent’s board of directors concluded that the positive factors relating to the Memorandum of Understanding and the transactions contemplated thereby, including the Exchange Offer, substantially outweighed the potential negative factors. The foregoing discussion of information and factors considered and given weight by Alcatel Lucent’s board of directors is not intended to be exhaustive, but includes the principal factors considered by Alcatel Lucent’s board of directors. In view of the variety of factors considered in connection with its evaluation of the Memorandum of Understanding

 

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and the transaction contemplated thereby, including the Exchange Offer, Alcatel Lucent’s board of directors did not find it practicable to, and did not, quantify or otherwise assign relative weights to the specific factors considered in reaching its determinations. In addition, individual members of Alcatel Lucent’s board of directors may have given different weights to different factors.

Reasons for the Alcatel Lucent Board Recommendation

In accordance with Article 231-19 of the AMF General Regulation, at its meeting on October 28, 2015, the participating members of the Alcatel Lucent board of directors unanimously delivered a reasoned opinion (avis motivé) of the Exchange Offer for Alcatel Lucent, the holders of Alcatel Lucent Securities and Alcatel Lucent’s employees. The following is a translation from French of the original reasoned opinion of Alcatel Lucent’s board of directors. Certain terminology has been conformed to the defined terms used in this exchange offer/prospectus and certain typographical conventions have been conformed to United States usage.

“The present reasoned opinion has been reached by the following members of the Alcatel Lucent board of directors, who were present: Mr. Philippe Camus, Ms. Carla Cico, Mr. Stuart E. Eizenstat, Ms. Kim Crawford Goodman, Mr. Jean-Cyril Spinetta and Ms. Sylvia Summers, it being specified that, in light of their proposed nomination to the board of directors of Nokia, Mr. Louis R. Hughes, Mr. Jean C. Monty and Mr. Olivier Piou decided not to participate in the discussions on and not to vote on the reasoned opinion. Mr. Francesco Caio was absent.

Alcatel Lucent’s board of directors was reminded that in order to diligently complete its assessment of the Exchange Offer and to reach a reasoned opinion on the Exchange Offer, it was assisted by Zaoui, as financial advisor to Alcatel Lucent, and Sullivan & Cromwell, as legal advisor to Alcatel Lucent.

In accordance with Article 231-19 of the AMF General Regulation and pursuant to the provisions of the Memorandum of Understanding, Alcatel Lucent’s board of directors was required to provide its assessment of the Exchange Offer and the expected impact of the Exchange Offer on Alcatel Lucent, holders of Alcatel Lucent Securities and employees of Alcatel Lucent.

The Chairman of Alcatel Lucent’s board of directors reminded the members of the rationale and the main terms and conditions of the proposed combination of the businesses of Alcatel Lucent and Nokia, as agreed in the Memorandum of Understanding, dated as of April 15, 2015, as amended by the Memorandum of Understanding Amendment, dated as of October 28, 2015, and as announced on April 15, 2015. The Chairman also notes that the Exchange Offer is expected to be filed with the AMF on October 29, 2015.

The Chairman noted to the members that Alcatel Lucent’s board of directors had received the Independent Expert Report of the Independent Expert, Associés en Finance, which was appointed as independent expert in accordance with Article 261-1 et seq. of the AMF General Regulation, on the financial terms of the Exchange Offer.

The Chairman also noted to the members that representatives of Zaoui presented their oral opinion, which was confirmed by delivery of a written opinion dated October 28, 2015, to the effect that, as of such date and based upon and subject to the assumptions made, procedures followed, matters considered, and qualifications and limitations described in its written opinion, the exchange ratio proposed to be paid to the holders (other than Nokia and its affiliates) of Alcatel Lucent Shares, including Alcatel Lucent ADSs, pursuant to the Exchange Offer was fair from a financial point of view to such holders.

Alcatel Lucent’s board of directors has also taken the following into consideration:

 

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Premium of Exchange Ratio Over Alcatel Lucent Shares Trading Price. Alcatel Lucent’s board of directors considered that, based on the closing share price of Nokia Shares of EUR 7.77 on

 

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April 13, 2015, the exchange ratio offered an equivalent of EUR 4.27 per Alcatel Lucent Share (or EUR 4.48 per Alcatel Lucent Share on a fully diluted basis), and valued Alcatel Lucent at EUR 15.6 billion on a fully diluted basis, corresponding to:

 

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a premium to holders of Alcatel Lucent Shares of 11% and a fully diluted premium of 16%, in each case based on the closing price of Alcatel Lucent Shares (on Euronext Paris) as of April 13, 2015;

 

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a premium to holders of Alcatel Lucent Shares of 18% and a fully diluted premium of 24%, in each case based on the weighted average price of Alcatel Lucent Shares (on Euronext Paris) for the period beginning March 16, 2015 and ending April 13, 2015;

 

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a premium to holders of Alcatel Lucent Shares of 28% and a fully diluted premium of 34%, in each case based on the weighted average price of Alcatel Lucent Shares (on Euronext Paris) for the period beginning January 14, 2015 and ending April 13, 2015;

 

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a premium to holders of Alcatel Lucent Shares of 48% and a fully diluted premium of 55%, in each case based on the weighted average price of Alcatel Lucent Shares (on Euronext Paris) for the period beginning October 14, 2014 and ending April 13, 2015; and

 

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a premium to holders of Alcatel Lucent Shares of 54% and a fully diluted premium of 61%, in each case based on the weighted average price of Alcatel Lucent Shares (on Euronext Paris) for the period beginning April 11, 2014 and ending April 13, 2015.

The fully diluted premiums above reflect the implied premium paid by Nokia to Alcatel Lucent’s market capitalization, based on volume weighted average price of Alcatel Lucent Shares over the referenced period, as adjusted for the dilutive effect of the OCEANEs, which represent a substantial portion of Alcatel Lucent Shares on a fully diluted basis.

 

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Exchange Ratio for the OCEANEs. Alcatel Lucent’s board of directors considered that the exchange ratio applicable to each series of OCEANEs pursuant to the Exchange Offer is based on the conversion/exchange ratio applicable to that series, including the temporary adjustment to each of the conversion/exchange ratios as a result of the opening of the French Offer in accordance with the terms and conditions set out in the prospectus of each series of OCEANEs. The exchange ratio would represent a premium to the historical trading prices of each series of OCEANEs over various periods, including, based on the closing price of Nokia Shares of EUR 7.77 on April 13, 2015, a premium to holders of 2018 OCEANEs of 28%, a premium to holders of 2019 OCEANEs of 13% and a premium to holders of 2020 OCEANEs of 13%, based on the closing prices of each series of OCEANEs (on Euronext Paris) as of April 13, 2015 and an opening date of the Exchange Offer of November 18, 2015. Alcatel Lucent’s board of directors considered the conclusions of the Independent Expert reflected in the Independent Expert Report. In particular, according to the Independent Expert Report, as of April 9, 2015, which was assumed by the Independent Expert to be the latest date prior to rumors of a possible transaction between Alcatel Lucent and Nokia, the Exchange Offer with respect to the holders of OCEANEs displayed a premium to the intrinsic value (i.e., the value calculated based on certain assumptions defined by the Independent Expert) and to the listed price of each series of OCEANEs. The Independent Expert Report noted that as of October 23, 2015, the exchange ratio shows a substantial premium to the listed and to the intrinsic values of the 2018 OCEANEs and a very small discount (below 5%) to the listed and intrinsic values of the 2019 OCEANEs and the 2020 OCEANEs based on their respective 1-month or 3-month averages. In particular, the Independent Expert Report noted that, based on the estimated post-Exchange Offer intrinsic values of the OCEANEs, the exchange ratio proposed during the Exchange Offer would provide a premium of between 18.8% and 19.0% for the 2018 OCEANEs, a discount of between 0.4% and 3.5% for the 2019 OCEANEs and between a premium of 0.3% and a discount of 2.9% for the 2020 OCEANEs. The exchange

 

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ratio proposed for the 2019 OCEANEs and the 2020 OCEANEs pursuant to the Exchange Offer is equivalent to the spot listed prices of the OCEANEs and to their intrinsic values at October 23, 2015. The Independent Expert Report also noted that it is important to mention that the listed prices and the intrinsic values of the OCEANEs reflect current market conditions and current liquidity levels. The Independent Expert Report noted that holders of OCEANEs that choose to keep their OCEANEs would, should the Exchange Offer be successful, take the risk of a substantial drop in liquidity of the underlying Alcatel Lucent Shares and of the OCEANEs. The Independent Expert Report also noted that, on the other hand, should the Exchange Offer fail, such holders of OCEANEs would take the risk of a potential drop in the price of the Alcatel Lucent Shares. The Independent Expert Report concluded that the exchange ratio of 0.6930 Nokia Shares for one 2018 OCEANE, 0.7040 Nokia Shares for one 2019 OCEANE and 0.7040 Nokia Shares for one 2020 OCEANE is fair.

 

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Participation in the Future of the Combined Businesses. Alcatel Lucent’s board of directors considered that the combination of the businesses will continue to offer holders of Alcatel Lucent Securities who participate in the Exchange Offer and receive Nokia Shares the opportunity to participate in any future earnings or growth of the combined businesses of Alcatel Lucent and Nokia and benefit from any potential future appreciation in the value of the Nokia Shares. In particular, Alcatel Lucent’s board of directors considered the following factors in relation to participation of holders of the Alcatel Lucent Securities in the future of the combined businesses:

 

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a combination of the businesses of Nokia and Alcatel Lucent would offer a unique opportunity to create a European champion and global leader in ultra-broadband, IP networking and cloud applications and provide a platform to accelerate Alcatel Lucent’s strategic vision, with the financial strength and critical scale needed to develop the next generation of network technology, including 5G;

 

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the combined businesses would be expected to have strong innovation capabilities, with Alcatel Lucent’s Bell Labs and Nokia’s FutureWorks, as well as Nokia Technologies, which Nokia stated would remain as a separate entity with a clear focus on licensing and the incubation of new technologies, and with more than 40,000 R&D employees and investment of EUR 4.7 billion in R&D in 2014, the combined businesses would 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;

 

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Alcatel Lucent and Nokia also have highly complementary portfolios and geographies, with particular strength in the United States, China, Europe and Asia-Pacific, and would be expected to bring together complementary strengths in fixed and mobile broadband, IP routing, core networks, cloud applications and services;

 

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the combined businesses would be positioned to target a larger addressable market with an improved growth profile as compared to Alcatel Lucent as a standalone business, and the belief of Alcatel Lucent’s board of directors that consumers are increasingly seeking to access data, voice and video across networks, creating an environment in which technology that used to operate independently now needs to work together, and the belief of Alcatel Lucent’s board of directors that the combined businesses would be well-placed to assist telecom operators, internet providers and other large enterprises address this challenge;

 

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the combination of the businesses of Alcatel Lucent and Nokia would target approximately EUR 900 million of full-year operating cost synergies within three years, assuming closing of the transaction in the first half of 2016, in a wide range of areas, including (i) organizational streamlining, rationalization of overlapping products and services, central functions, and regional and sales organizations; (ii) reduction of various

 

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overhead costs in real estate, manufacturing and supply-chain, information technology and overall general and administrative expenses, including redundant public company costs; (iii) procurement given expanded purchasing requirements of the combined businesses; and (iv) R&D efficiencies, particularly in wireless;

 

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the combined businesses would also target reductions in interest expenses of approximately EUR 200 million to be achieved on a full year basis in 2017, with the Exchange Offer expected to be accretive to Nokia earnings on a non-IFRS basis (excluding restructuring charges and amortization of intangibles) in 2017;

 

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the combined businesses would be expected to have a strong balance sheet;

 

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Nokia has stated its intention to maintain its long term target to return to an investment grade credit rating and manage the combined capital structure accordingly by retaining significant gross and net cash positions and by proactively reducing indebtedness, including through exercise of an early repayment option for its EUR 750 million convertible bond in the fourth quarter of 2015, which is expected to result in the full conversion of this convertible bond to equity prior to the completion of the Exchange Offer, with no expected cash outflow;

 

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although Nokia has stated that it will suspend its capital structure optimization program, including suspending the share repurchase program execution until the completion of the Exchange Offer, it has also indicated that it intends to evaluate the resumption of a capital structure optimization program for the combined businesses of Alcatel Lucent and Nokia;

 

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Nokia’s statement that Nokia Technologies, a source of innovation, expertise and intellectual property, would not be impacted by the Exchange Offer and will remain as a separate entity with a clear focus on incubating new technologies and sharing those technologies through an active licensing program; and

 

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the combined businesses of Alcatel Lucent and Nokia, would be expected to have increased scale and scope in a variety of dimensions, including increased financial scale, greater diversification of markets, and a larger product portfolio than Alcatel Lucent alone, thereby diversifying certain of the risks associated with holding Alcatel Lucent Securities alone.

 

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Enhanced Scale. Alcatel Lucent’s board of directors considered that the enhanced scale of the combined businesses of Alcatel Lucent and Nokia would allow more effective competition in an economically challenging environment. Alcatel Lucent’s board of directors also recognized that a combination of the businesses of Alcatel Lucent would be consistent with market preference for large vendors with scale and scope, particularly in the context of the advent of 5G and related required investments.

 

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Rights Attaching to New Nokia Shares. Alcatel Lucent’s board of directors considered that the new Nokia Shares will have the same rights and benefits as all existing ordinary shares of Nokia, including the right to any future dividend.

 

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Integration and Reorganization. Alcatel Lucent’s board of directors considered Nokia’s announcement that the strategic direction of Alcatel Lucent will be to continue to offer leading solutions in Alcatel Lucent’s business lines by taking advantage of the increased customer base attributable to the combination of Nokia and Alcatel Lucent. Nokia has stated that it intends to integrate Alcatel Lucent into the Nokia group as soon as possible after the Completion of the Exchange Offer. In addition Nokia has stated that, as soon as possible following the Completion of the Exchange Offer, it intends to propose changes to the composition of the Alcatel Lucent board of directors. The composition of the Alcatel Lucent

 

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board of directors will take into account the new share ownership structure of Alcatel Lucent and in particular, the ownership level of Nokia. Nokia has also stated that it currently expects that after the Completion of the Exchange Offer, the Nokia Networks business would be conducted through four business groups: Mobile Networks, Fixed Networks, Applications & Analytics and IP/Optical Networks. Nokia has stated that these business groups would provide an end-to-end portfolio of products, software and services to enable the combined company to deliver the next generation of leading networks solutions and services to customers. Alongside these, Nokia Technologies would continue to operate as a separate business group. Each business group would have strategic, operational and financial responsibility for its portfolio and would be fully accountable for meeting its targets. The four Networks business groups would have a common Integration and Transformation Office to drive synergies and to lead integration activities. Nokia has stated that the business group leaders would report directly to Nokia’s President and Chief Executive Officer and stated the following:

 

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Mobile Networks (MN) would include Nokia’s and Alcatel Lucent’s comprehensive Radio portfolios and most of their converged Core network portfolios including IMS/VoLTE and Subscriber Data Management, as well as the associated mobile networks-related Global Services business. This unit would also include Alcatel Lucent’s Microwave business and all of the combined company’s end-to-end Managed Services business. Through the combination of these assets, Mobile Networks would provide leading end-to-end mobile networks solutions for existing and new platforms, as well as a full suite of professional services and product-attached services.

 

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Fixed Networks (FN) would comprise the current Alcatel Lucent Fixed Networks business whose cutting-edge innovation and market position would be further supported through strong collaboration with the other business groups. This business group would provide copper and fiber access products and services to offer customers ultra-broadband end-to-end solutions to transform their networks, deploying fiber to the most economical point.

 

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Applications & Analytics (A&A) would combine the Software and Data Analytics-related operations of both companies. This comprehensive applications portfolio would include Customer Experience Management, OSS as distinct from network management such as service fulfilment and assurance, Policy and Charging, services, Cloud Stacks, management and orchestration, communication and collaboration, Security Solutions, network intelligence and analytics, device management and Internet of Things connectivity management platforms. CloudBand would also be housed in this business group, which would drive innovation to meet the needs of a convergent, Cloud-centric future.

 

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IP/Optical Networks (ION) would combine the current Alcatel Lucent IP Routing, Optical Transport and IP video businesses, as well as the software defined networking (SDN) startup, Nuage, plus Nokia’s IP partner and Packet Core portfolio. IP/Optical Networks would continue to drive Alcatel-Lucent’s technology leadership, building large scale IP/Optical infrastructures for both service providers and, increasingly, web-scale and tech-centric enterprise customers.

 

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Nokia Technologies (TECH) would remain as a separate entity with a clear focus on licensing and the incubation of new technologies. Nokia Technologies would continue to have its own innovation, product development and go-to-market operations.

Nokia has also stated that it expects to align its financial reporting under two key areas: Nokia Technologies and the Networks business. The Networks business would comprise the business groups of Mobile Networks, Fixed Networks, Applications & Analytics and IP/Optical

 

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Networks. Nokia has also stated that it expects to provide selective financial data separately for each of the four Networks business groups to ensure transparency for Nokia investors over the performance of each of them.

 

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Strategic Announcements by Nokia. Alcatel Lucent’s board of directors considered Nokia’s announcement on August 3, 2015, of its agreement to sell its HERE digital mapping and location services business to a consortium of leading automotive companies, comprising AUDI AG, BMW Group and Daimler AG. The transaction values HERE at an enterprise value of EUR 2.8 billion with a normalized level of working capital and is expected to close in the first quarter of 2016, subject to customary closing conditions and regulatory approvals. Upon closing, Nokia estimates that it will receive net proceeds of slightly above EUR 2.5 billion, as the purchaser would be compensated for certain defined liabilities of HERE currently expected to be slightly below EUR 300 million as part of the transaction. Alcatel Lucent’s board of directors considered that strategic alternatives with respect to HERE were taken into account at the time of approval of the entry of Alcatel Lucent into the Memorandum of Understanding.

 

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Strategic Decision by Alcatel Lucent. Alcatel Lucent’s board of directors considered Alcatel Lucent’s decision, announced on October 6, 2015, that it will continue to operate its undersea cables business, Alcatel Lucent Submarine Networks or ASN, as a wholly owned subsidiary. Alcatel Lucent’s board of directors considered that ASN will continue to execute its strategic roadmap, strengthen its leadership in submarine cable systems for telecom applications and pursue further diversification in the Oil & Gas Sector. Alcatel Lucent’s board of directors considered that possible strategic alternatives with respect to ASN were taken into account at the time of approval of the entry of Alcatel Lucent into the Memorandum of Understanding.

 

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Conditions to the Filing of the Exchange Offer. In accordance with the terms and conditions of the Memorandum of Understanding, the filing of the Exchange Offer is subject to the fulfillment of certain conditions contained in the Memorandum of Understanding. In particular, Alcatel Lucent’s board of directors notes that:

 

•

Nokia has obtained all required antitrust and competition approvals (including from the European Commission, the United States and China);

 

•

Nokia has obtained approval from the Committee on Foreign Investment in the United States;

 

•

Nokia has obtained approval from Ministry of Economy, Industry and Digital Technology of the French Republic pursuant to applicable regulation on foreign investments in France (Articles L. 151-1 et seq. and R. 153-1 et seq. of the French Monetary and Financial Code);

 

•

all approvals from the banking and insurance regulators have been obtained, including the European Central Bank, required due to the indirect change of control of certain subsidiaries; and

 

•

Nokia’s board of directors has recommended that the shareholders of Nokia approve the authorization for the Nokia board of directors to issue such number of new Nokia Shares as may be necessary for delivering the Nokia Shares offered in consideration for Alcatel Lucent Securities tendered into the Exchange Offer and for the Completion of the Exchange Offer, and has not subsequently withdrawn such recommendation.

 

•

Conditions to the Completion of the Exchange Offer. In accordance with French law and the AMF General Regulation, the Memorandum of Understanding, the exchange offer/prospectus and the draft French Offer document (projet de note d’information) prepared by Nokia, the Completion of the Exchange Offer is subject to the following main conditions:

 

•

the Minimum Tender Condition; and

 

•

the Nokia Shareholder Approval.

 

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Alcatel Lucent’s board of directors considered that, subject to applicable SEC and AMF rules and regulations, Nokia reserves the right, in its sole discretion, to waive the Minimum Tender Condition to any level at or above the Mandatory Minimum Acceptance Threshold.

 

•

Other Provisions of the Memorandum of Understanding. Alcatel Lucent’s board of directors considered that the provisions of the Memorandum of Understanding, including the obligations of Alcatel Lucent under the Memorandum of Understanding, and the transactions contemplated thereby continue to be in the best interests of Alcatel Lucent, its employees and its stakeholders (including holders of Alcatel Lucent Shares and holders of other Alcatel Lucent Securities).

 

•

Previous Opinion of Alcatel Lucent’s Financial Advisor. Alcatel Lucent’s board of directors considered the oral opinion of Zaoui delivered to it on April 14, 2015, which was confirmed by delivery of a written opinion dated April 14 , 2015, to the effect that, as of such date and based upon and subject to the assumptions made, procedures followed, matters considered, and qualifications and limitations described in its written opinion, the exchange ratio proposed to be paid to the holders (other than Nokia and its affiliates) of Alcatel Lucent Shares, including Alcatel Lucent ADSs, pursuant to the Exchange Offer was fair from a financial point of view to such holders.

 

•

French Offer Document. Alcatel Lucent’s board of directors considered the draft French Offer document (projet de note d’information) prepared by Nokia, including the reasons for the Exchange Offer, Nokia’s intentions following Completion of the Exchange Offer, the agreements that may have an impact on the Exchange Offer, the terms of the Exchange Offer, the assessment of the exchange ratio and the valuation analysis prepared by Société Générale, acting as the presenting bank in connection with the French Offer, which Nokia intends to file together with the French Offer with the AMF on October 29, 2015.

 

•

Finnish Listing Prospectus. The Finnish listing prospectus for the listing of Nokia Shares on Nasdaq Helsinki, which was approved by the Finnish Financial Supervisory Authority on October 23, 2015 and passported into France on October 26, 2015, for listing of Nokia Shares on the Euronext Paris, and in particular the sections entitled “The Alcatel Lucent Transaction”, “The Memorandum of Understanding” and “The Exchange Offer”, which describe the Exchange Offer and the combination of the businesses of Alcatel Lucent and Nokia.

 

•

Finnish Proxy Materials. The Finnish proxy materials made available to Nokia’s shareholders on October 26, 2015, and in particular the section entitled “Recommendation of Nokia’s Board of Directors” which contained the recommendation of Nokia’s board of directors that the shareholders of Nokia approve the authorization for Nokia’s board of directors to issue such number of new Nokia Shares as may be necessary for delivering the Nokia Shares offered in consideration for Alcatel Lucent Securities tendered into the Exchange Offer and for the Completion of the Exchange Offer.

 

•

Exchange Offer/Prospectus. The exchange offer/prospectus included in the registration statement on Form F-4 filed by Nokia with the SEC on August 14, 2015, as amended on October 22, 2015, and in particular the section entitled “Reasons for the Exchange Offer” which described the rationale for the combination of the businesses of Alcatel Lucent and Nokia and the section entitled “Risk Factors” which described the principal risks related to the Exchange Offer and Nokia.

 

•

Alcatel Lucent French Group Committee Information. The information document provided by Nokia to the Alcatel Lucent French Group Committee on the Exchange Offer and their opinion dated June 1, 2015, as well as the report of the advisor appointed by the Alcatel Lucent French Group Committee dated May 22, 2015.

 

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•

French Response Document. The draft response document (projet de note en réponse) prepared by Alcatel Lucent.

Based on the Independent Expert Report, Alcatel Lucent’s board of directors also acknowledged that when considering the exchange ratio offered in the Exchange Offer to the Company holders of Alcatel Lucent Securities, the Independent Expert stated in its Independent Expert Report that:

 

•

The Exchange Offer is optional for both holders of Alcatel Lucent Shares and holders of OCEANEs in the sense that they can choose to tender their securities into the Exchange Offer or not.

 

•

the Independent Expert’s work, through a multi-criteria analysis, had led to the following results:

 

•

The exchange ratio of 0.5500 Nokia Share for 1 Alcatel Lucent Share shows a premium of +6% to the implied ratio based on share prices as of April 9, 2015 and a premium between +9% and +14%, for the 1, 2 and 3 month volume weighted average prices of both shares. Given numerous rumors about consolidation scenarios in the sector and notably around Alcatel Lucent and Nokia, it is likely that the price of Alcatel Lucent Shares was already incorporating a speculative premium. As a matter of fact, the exchange ratio for the 6 and 9 month volume weighted average prices before April 9, 2015, shows a premium of +27% and +29% respectively.

 

•

Looking at a diversified sample of Telecom Equipment manufacturers, the comparable companies valuation analysis, based on market forecast consensus as of October 23, 2015, leads up to an average implied parity of 0.50. At 0.5500 Nokia Share for 1 Alcatel Lucent Share, the proposed exchange ratio provides a premium of +10% to the valuation of the two companies using the comparable valuation approach.

 

•

The intrinsic valuation of Alcatel Lucent and Nokia based on the discounted cash flow methodology (DCF to firm or DCF to equity) using, for the short term market consensus forecast and for the longer term Trival modeling, leads to an implied parity between 0.48 and 0.52 based on market conditions prevailing as of October 23, 2015 and without taking into account any impact of the combination. Hence, the exchange ratio of 0.5500 Nokia Share for 1 Alcatel Lucent Share provides a premium of +6% to +14% to these implied parities.

 

•

Based on the above, at 0.5500 Nokia Share for 1 Alcatel Lucent Share, the exchange ratio is fair for holders of Alcatel Lucent Shares.

 

•

The Exchange Offer, in respect of both Alcatel Lucent Shares and OCEANEs, entails a change, during the offer period, in the conversion/exchange ratios of each series of OCEANEs. The Exchange Offer with respect to each series of OCEANEs takes into account this adjustment to the conversion/exchange ratio. Thus, the number of Nokia Shares to be exchanged will depend on the success ratio of the Exchange Offer, in particular with respect to each series of OCEANEs. However, regardless of the result of the Exchange Offer with respect to each series of OCEANEs and the number of Nokia Shares that will consequently be issued, the exchange ratio of 0.5500 Nokia Shares per Alcatel Lucent Share is higher than the implicit parities coming from the discounted cash flow calculation performed by the Independent Expert based on market conditions as of October 23, 2015. Hence confirming that the Exchange Offer is fair with respect to the Alcatel Lucent Shares.

 

•

Beyond the premium that holders of Alcatel Lucent Shares will get compared to the intrinsic valuation, holders of Alcatel Lucent Shares that tender their Alcatel Lucent Shares, will become holders of Nokia Shares, one of the most liquid shares of the Euro zone, and it is

 

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expected that the liquidity of the Nokia Shares will further increase should the Exchange Offer be successful. In addition, those holders of Nokia Shares will be in a position to benefit from the potential incremental value creation if the planned synergies materialize.

 

•

The Exchange Offer is optional for the holders of OCEANEs and allows them, should they tender their OCEANEs, to benefit from the same financial conditions that they would get if they decide first to convert their OCEANEs into Alcatel Lucent Shares and then to tender these Alcatel Lucent Shares into the Exchange Offer. Therefore there is no breach of parity between shareholders and OCEANE holders.

 

•

As of April 15, 2015, the date of announcement of the contemplated combination, the Exchange Offer with respect to the holders of OCEANEs displayed a premium to the intrinsic value and to the listed price of each series of OCEANEs. The Independent Expert Report noted that as of October 23, 2015, the exchange ratio shows a substantial premium to the listed and to the intrinsic value of the 2018 OCEANEs and a very small discount (below 5%) to the listed and intrinsic values of the 2019 OCEANEs and the 2020 OCEANEs based on their respective 1-month or 3-month averages. In particular, the Independent Expert Report noted that, based on the estimated post-Exchange Offer intrinsic values of the OCEANEs, the exchange ratio proposed during the Exchange Offer would provide a premium of between 18.8% and 19.0% for the 2018 OCEANEs, a discount of between 0.4% and 3.5% for the 2019 OCEANEs and between a premium of 0.3% and a discount of 2.9% for the 2020 OCEANEs. The exchange ratio proposed for the 2019 OCEANEs and the 2020 OCEANEs pursuant to the Exchange Offer is equivalent to the spot listed prices of the OCEANE bonds and to their intrinsic values at October 23, 2015. It is important to mention that the listed prices and the intrinsic values of the OCEANE reflect current market conditions and current liquidity levels. Holders of OCEANEs that choose to keep their OCEANEs would, should the Exchange Offer be successful, take the risk of a substantial drop in liquidity of the underlying Alcatel Lucent Shares and of the OCEANEs. On the other hand, should the Exchange Offer fail, such holders of OCEANEs would take the risk of a potential drop in the price of the Alcatel Lucent Shares. Hence, the exchange ratio of 0.6930 Nokia Shares for one 2018 OCEANE, 0.7040 Nokia Shares for one 2019 OCEANE and 0.7040 Nokia Shares for one 2020 OCEANE is fair.

Alcatel Lucent’s board of directors considered that, based on the valuation work of the Independent Expert and the above explanations, the Independent Expert concluded that the terms of the Exchange Offer by Nokia for Alcatel Lucent Shares and OCEANEs are fair.

Alcatel Lucent’s board of directors considered that the full text of the Independent Expert Report of the Independent Expert, Associés en Finance, dated October 28, 2015, which sets forth the assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the report, would be attached to Alcatel Lucent’s Schedule 14D-9 and response document (note en réponse) available to holders of Alcatel Lucent Securities.

Finally, Alcatel Lucent’s board of directors reviewed the potential consequences of the Exchange Offer on the stakeholders of Alcatel Lucent, including the employees of Alcatel Lucent, and acknowledged the following:

 

•

Continued Presence in France. Nokia has stated that it is a global company, with deep roots and heritage in many parts of the world and that when it joins with Alcatel Lucent, Nokia expects that France, where Alcatel Lucent is a fundamental participant in the technology ecosystem, will be a vibrant center of the combined company. Nokia has stated that it intend to be an important contributor to the overall development of the broader technology ecosystem and a driver of innovation in France. Nokia has stated that consistent with this goal, it expected that after the Completion of the Exchange Offer Nokia will have a presence in France that spans leading innovation activities including a 5G/Small Cell Research &

 

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Development Centre of Excellence; a Cyber-Security lab similar to Nokia’s existing facility in Berlin designed to support European collaboration on the topic; and a continued focus on Bell Labs and wireless Research & Development. Nokia has stated that engaging with and supporting projects and academic efforts that enhance the development of future technologies will remain an important priority.

 

•

Employment in France. Nokia has also stated that it intends to maintain employment in France that is consistent with Alcatel Lucent’s end-2015 Shift Plan commitments, with a particular focus on the key sites of Villarceaux (Essonne) and Lannion (Côtes d’Armor). In addition, Nokia has stated that it expects to expand R&D employment with the addition of several hundred new positions targeting recent graduates with skills in future-oriented technologies, including 5G, to ensure ongoing support for customers, activities for support services, and that pre- and post-sales are expected to continue as well. In the context of the proposed combination with Alcatel Lucent and subject to its consummation, Nokia has stated that its commitments in France relating to employment are the following:

 

•

Follow the Shift plan commitments regarding the level of employment in France, for a period of at least two years after the Completion of the Exchange Offer. The base comprises Alcatel Lucent France/International (ALUI) operational heads (excluding branches), Bell Labs France, RFS (Radio Frequency Systems) and excluding ASN (Alcatel-Lucent Submarine Networks) and EU factory (landing point of the reference perimeter is 4,200 headcount and excluding RFS unit). Nokia will maintain resources from its French operations throughout the reference period to support its customers in France;

 

•

Strengthen the operations and activity levels for the long term at the two major technology sites of Villarceaux (Essonne) and Lannion (Cotes d’Armor) following the Completion of the Exchange Offer, with a focus on augmenting existing activities, functions, and advanced research work;

 

•

Increase significantly and sustainably the R&D presence in France scaling up 5G, IP network management platforms (incl. Software Defined Networking) and cyber-security with employment evolving from 2,000 people to 2,500 people including the recruiting of at least 300 newly graduated talents over the coming three years. The R&D employment level will be maintained for a period of at least four years after the Completion of the Exchange Offer;

 

•

Localize in France worldwide technology centers of expertise following the Completion of the Exchange Offer, including in the areas of: 5G and Small Cells R&D to anchor France in the future of wireless activities for the combined group, as France will be equipped with a full 5G innovation engine which will encompass research activities with Bell Labs, development activities as well as end to end platforms and trial networks; IP management platforms (incl. Software Defined Networking); cyber Security (research, product development and platforms) while continuing to leverage the partnership established by Alcatel Lucent with Thalès; Bell Labs; and Wireless Transmission;

 

•

A major worldwide corporate organization in charge of strategic innovation including networks research and Bell Labs will be led from France and will comprise key staff members; maintain some operations and activities at operational hubs located in France and providing services to other locations in the world following the consummation of the transaction, including in the areas of local support services and local pre- and post-sales resources for France and selected European & African countries; and

 

•

Take all necessary measures to find sustainable solutions for the French employees who could be impacted by the rationalization of corporate activities between Nokia and Alcatel Lucent.

 

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•

Additional French Commitments. Nokia has stated that in its discussions with the French government, Nokia has confirmed that France will play a leading role in the combined company’s R&D operations. Nokia will build on the strong competencies in the country within key technology areas, on the existing presence of Alcatel Lucent and its strong engagement in the technology ecosystem in France, and on the excellent new technical talent available from French universities. In addition to the employed-related commitments described in the section entitled “—Intentions of Nokia over the next twelve months—Intentions of Nokia with respect to employment in France”, Nokia has stated that it has made the following commitments in the context, and subject to, the proposed combination with Alcatel Lucent:

 

•

Alcatel Lucent will be represented by three board members in the combined company. Nokia will be also listed on Euronext Paris. The combined company will establish or keep the adequate legal entities in France and comply with French regulations related to sensitive contracts.

 

•

Nokia expects to benefit from becoming a deeply embedded part of France, tapping into and helping develop the technology ecosystem of the country. Nokia will invest further in the digital innovation ecosystem in France following the Completion of the Exchange Offer, primarily through the establishment of a long-term investment fund in the range of EUR 100 million. This fund will mainly target the Internet of Things, cyber-security and software platform enablers for next generation networks.

 

•

Nokia intends to support the development of the overall telecom ecosystem in France and to ensure continuity of Alcatel Lucent’s current initiatives. This involves playing an active role in the government’s “Industry of the Future” program, funding academic tuition, programs and chairs, situating technology experts within France (such as within Bell Labs France), and continuing Alcatel Lucent’s involvement in major initiatives such as Pôles de compétitivité Systematic, Cap Digital, and Images and Réseaux. Nokia will also develop three industrial platforms and networks prototypes in France within the fields of 5G, Industrial Internet, Internet of Things connectivity and cyber-security.

 

•

Nokia has stated that following the Completion of the Exchange Offer, Nokia, which will remain headquartered in Finland, intends to leverage the combined strengths of the companies’ strategic business locations and major R&D centers in other countries, including Finland, Germany, the United States and China.

 

•

Nokia has committed, upon Completion of the Exchange Offer, to providing regular updates to the French government as the integration of the two companies progresses.

 

•

Employee Arrangements. Pursuant to the Memorandum of Understanding, Alcatel Lucent agreed to accelerate or waive certain terms of the Alcatel Lucent Stock Options, Performance Shares and Performance Units in connection with the Exchange Offer, subject to certain conditions. Pursuant to the Memorandum of Understanding, Nokia and Alcatel Lucent have also agreed to enter into Liquidity Agreements with certain holders of Alcatel Lucent Stock Options, Performance Shares and Performance Units, pursuant to which such holders would be entitled to receive Nokia Shares under certain circumstances.

 

•

Employee Considerations. Alcatel Lucent completed the consultation with its French Group Committee as required by applicable French regulations. The French Group Committee indicated in its opinion of June 1, 2015 that it did not oppose the proposed combination of Alcatel Lucent with Nokia. Alcatel Lucent’s board of directors considered that Alcatel Lucent’s employees would benefit from the combination due to multiple factors, including the enhanced scale of the combined businesses of Alcatel Lucent and Nokia, the stability provided by the combined balance sheet of Alcatel Lucent and Nokia and the commitments made by Nokia in relation to employment, as further described above.

 

•

Customers and Suppliers Support. Alcatel Lucent’s board of directors considered that there is substantial support from customers and suppliers for the combination of the businesses of

 

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Alcatel Lucent and Nokia, including as a result of the enhanced scale of the combined businesses of Alcatel Lucent and Nokia and as a result of the stability provided by the combined balance sheet of Alcatel Lucent and Nokia.

 

•

Governance of Alcatel Lucent. Nokia has stated that Alcatel Lucent’s board of directors, in case of success of the Exchange Offer, will immediately reflect the new share ownership structure of Alcatel Lucent, and in particular, the ownership level of Nokia. Alcatel Lucent’s board of directors expects that Alcatel Lucent’s board of directors will be mainly composed of Nokia representatives, with remaining positions being held by independent directors in accordance with the requirements of the AFEP-MEDEF Code, to the extent applicable to Alcatel Lucent at the relevant time.

 

•

Governance of Nokia. Nokia has committed pursuant to the Memorandum of Understanding for the Corporate Governance & Nomination committee of Nokia’s board of directors and Alcatel Lucent to jointly identify three nominees to Nokia’s board of directors, and has nominated Mr. Louis R. Hughes, Mr. Jean C. Monty and Mr. Olivier Piou. Nokia further nominated Mr. Piou as the Vice Chairman of Nokia’s board of directors. Alcatel Lucent’s board of directors considered that the election of these director nominees would be subject to a Completion of the Exchange Offer and the approval at Nokia’s extraordinary general meeting by Nokia shareholders representing at least a majority of the votes cast. Alcatel Lucent’s board of directors also considered that on October 7, 2015, Nokia announced the planned leadership of Nokia post-Completion of the Exchange Offer. However, no resolution regarding the composition of the Nokia Leadership team following the Completion of the Exchange Offer has been made.

Alcatel Lucent’s board of directors considered that Nokia has stated that no resolution had been made as to which of the abovementioned persons would serve as members of the Nokia Group Leadership Team after the Completion of the Exchange Offer. The proposed appointments would only be implemented after the successful Completion of the Exchange Offer and be subject to the completion of the relevant works council consultation procedures, if any.

As a result of the foregoing, the participating members of Alcatel Lucent’s board of directors, taking into account the factors above, unanimously:

 

(i)

determined that the Exchange Offer is in the best interest of Alcatel Lucent, its employees and its stakeholders (including the holders of Alcatel Lucent Shares and holders of other Alcatel Lucent Securities);

 

(ii)

recommended that all holders of Alcatel Lucent Shares and holders of Alcatel Lucent ADSs tender their Alcatel Lucent Shares and/or their Alcatel Lucent ADSs pursuant to the Exchange Offer; and

 

(iii)

recommended that all holders of OCEANEs tender their OCEANEs pursuant to the Exchange Offer.

Alcatel Lucent’s board of directors draws the attention of the holders of the OCEANEs to the fact that, under the terms of each of the OCEANEs, the opening of the Exchange Offer will result in, among other things, a temporary adjustment to the conversion/exchange ratio applicable to each series of OCEANEs and, in certain circumstances, the right of holders of OCEANEs to request early redemption of outstanding OCEANEs during a specified period, at a price calculated in accordance with the terms of the relevant OCEANEs. As a result, holders of OCEANEs will have a number of alternatives to tendering into the Exchange Offer available with respect to the OCEANEs held, each of which has different characteristics and are subject to specific risks, which the holders of OCEANEs will have to appreciate based on their specific situation and the then prevailing circumstances.

 

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For further information on such alternatives and on the consequences of the Exchange Offer under the terms of each of the OCEANEs, see the section entitled “The Exchange Offer—Matters Relevant for OCEANEs Holders”, the prospectus applicable to each series of OCEANEs and the Independent Expert Report, filed with Alcatel Lucent’s Solicitation/Recommendation Statement on Schedule 14D-9, which is being distributed to Alcatel Lucent Security holders together with this exchange offer/prospectus and is incorporated herein by reference.

The board of directors noted that all the members of Alcatel Lucent’s board of directors (Mr. Philippe Camus, Mr. Francesco Caio, Ms. Carla Cico, Mr. Stuart E. Eizenstat, Ms. Kim Crawford Goodman, Mr. Louis R. Hughes, Mr. Jean C. Monty, Mr. Olivier Piou, Mr. Jean-Cyril Spinetta and Ms. Sylvia Summers) confirmed that, within the limit provided by Article 12 of the By-Laws of Alcatel Lucent (i.e., each member shall retain 500 Alcatel Lucent Shares), he or she intends to validly tender or cause to be validly tendered pursuant to the Exchange Offer all Alcatel Lucent Securities held of record or beneficially owned by such director immediately prior to the Expiration Date (other than Alcatel Lucent Securities for which such holder does not have discretionary authority). In addition, the 2010 annual shareholders meeting of Alcatel Lucent authorized the payment of additional attendance fees (jetons de présence) to directors, subject to each director (i) using the additional fees received (after taxes) to purchase Alcatel Lucent Shares and (ii) holding the acquired Alcatel Lucent Shares for the duration of his or her term of office. As a result, each member of Alcatel Lucent’s board confirmed that he or she will hold any Alcatel Lucent Shares purchased with these additional fees for so long as he or she remains a director of Alcatel Lucent and any such restrictions remain applicable.

The terms of Alcatel Lucent’s Performance Shares plans and related decisions of Alcatel Lucent’s board of directors require that Mr. Philippe Camus continues to hold the Alcatel Lucent Shares granted in connection therewith and the Alcatel Lucent Shares purchased in connection therewith for so long as he remains the Chairman of Alcatel Lucent’s board of directors. Mr. Camus is also required to continue to hold any Alcatel Lucent Shares acquired during his term for so long as he remains in office. As a result, Mr. Camus confirmed that he will not be allowed to tender the Shares he holds into the Exchange Offer, given that and for as long as these undertakings to hold the Alcatel Lucent Shares he holds are enforceable.

The foregoing does not include any Alcatel Lucent Securities over which, or with respect to which, any director acts in a fiduciary or representative capacity or is subject to the instructions of a third party with respect to such tender.

Alcatel Lucent’s board of directors also confirmed that, pursuant to the terms of the Memorandum of Understanding, Alcatel Lucent will, and will cause each of its subsidiaries to, tender into the Exchange Offer all Alcatel Lucent Securities held by Alcatel Lucent or any of its subsidiaries as of the date of the opening of the French Offer, other than those Alcatel Lucent Securities held for purposes of (i) Alcatel Lucent Shares to be granted in lieu of accelerated Alcatel Lucent Performance Shares and (ii) Alcatel Lucent Shares to be granted in lieu of the Alcatel Stock Options Plan that Alcatel Lucent’s board of directors had considered granting in respect of the year ended December 31, 2014.”

In the course of reaching its determination that the Exchange Offer is in the best interests of Alcatel Lucent, its employees and its stakeholders (including holders of Alcatel Lucent Shares and holders of other Alcatel Lucent Securities) and its recommendation that holders of Alcatel Lucent Securities accept the Exchange Offer and tender their Alcatel Lucent Securities into the Exchange Offer, Alcatel Lucent’s board of directors considered numerous factors, including the factors specified in the foregoing discussion and the factors discussed in the section entitled “—Reasons for Approving the Memorandum of Understanding”. The foregoing discussion of information and factors considered and given weight by Alcatel Lucent’s board of directors is not intended to be exhaustive, but is believed to include all of the principal factors considered by Alcatel Lucent’s board of directors in making its

 

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determination and recommendation. In view of the variety of factors considered in connection with its evaluation of the Exchange Offer, Alcatel Lucent’s board of directors did not find it practicable to, and did not, quantify or otherwise assign relative weights to the specific factors considered in reaching its determination and recommendation. In addition, individual members of Alcatel Lucent’s board of directors may have given different weights to different factors.

In arriving at their respective determination and recommendations, the directors of Alcatel were aware of the interests of executive officers and directors of Alcatel Lucent as set forth in the section entitled “Item 3. Past Contacts, Transactions, Negotiations and Agreements” in Schedule 14D-9.

The full text of Zaoui’s updated written opinion dated October 28, 2015, which sets forth a description of the assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Zaoui in preparing its updated opinion, is attached as Annex B-2 to this exchange offer/prospectus.

An unofficial English translation of the full text of the Independent Expert Report of the Independent Expert, Associés en Finance, dated October 28, 2015, which sets forth the assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the report and Addendum, dated November 9, 2015, are attached as Annex C to Alcatel Lucent’s Solicitation/Recommendation Statement on Schedule 14D-9, which is being distributed to Alcatel Lucent Security holders together with this exchange offer/prospectus and is incorporated herein by reference, and Alcatel Lucent urges holders of Alcatel Lucent Securities to carefully read the Independent Expert Report in its entirety.

Intent to Tender

Subject to the paragraph below, each member of Alcatel Lucent’s board of directors (Mr. Philippe Camus, Mr. Francesco Caio, Ms. Carla Cico, Mr. Stuart E. Eizenstat, Ms. Kim Crawford Goodman, Mr. Louis R. Hughes, Mr. Jean C. Monty, Mr. Olivier Piou, Mr. Jean-Cyril Spinetta and Ms. Sylvia Summers) confirmed that, within the limit provided by Article 12 of the By-Laws of Alcatel Lucent (i.e., each member shall retain 500 Alcatel Lucent Shares), he or she intends to validly tender or cause to be validly tendered pursuant to the Exchange Offer all Alcatel Lucent Securities held of record or beneficially owned by such director immediately prior to the Expiration Date (other than Alcatel Lucent Securities for which such holder does not have discretionary authority). In addition, the 2010 annual shareholders meeting of Alcatel Lucent authorized the payment of additional attendance fees (jetons de présence) to directors, subject to each director (i) using the additional fees received (after taxes) to purchase Alcatel Lucent Shares and (ii) holding the acquired Alcatel Lucent Shares for the duration of his or her term of office. As a result, each member of Alcatel Lucent’s board confirmed that he or she will hold any Alcatel Lucent Shares purchased with these additional fees for so long as he or she remains a director of Alcatel Lucent and any such restrictions remain applicable.

The terms of Alcatel Lucent’s Performance Shares plans and related decisions of Alcatel Lucent’s board of directors require that Mr. Philippe Camus continues to hold the Alcatel Lucent Shares granted in connection therewith and the Alcatel Lucent Shares purchased in connection therewith for so long as he remains the Chairman of Alcatel Lucent’s board of directors. Mr. Camus is also required to continue to hold any Alcatel Lucent Shares acquired during his term for so long as he remains in office. As a result, Mr. Camus confirmed that he will not be allowed to tender the Shares he holds into the Exchange Offer, given that and for as long as these undertakings to hold the Alcatel Lucent Shares he holds are enforceable.

The foregoing does not include any Alcatel Lucent Securities over which, or with respect to which, any director acts in a fiduciary or representative capacity or is subject to the instructions of a third party with respect to such tender.

We understand that Alcatel Lucent has been informed that, as of the date of this exchange offer/prospectus, each executive officer (other than Mr. Camus whose intentions are described above) intends to tender the Alcatel Lucent Securities that he or she holds into the Exchange Offer, subject to any statutory, regulatory or other constraints that may apply.

 

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The number of Alcatel Lucent Securities held by executive officers and directors as of April 13, 2015, and as of October 27, 2015, is set forth under in Schedule 14D-9.

Certain employee holdings of Alcatel Lucent Shares are managed collectively through the FCP 2AL Mutual Fund (Fonds Commun de Placement Actionnariat Alcatel-Lucent) (“FCP 2AL”). FCP 2AL is a special mutual fund (Fonds Commun de Placement d’Entreprise) put in place for the implementation of the incentive agreements and the corporate savings plans, entered into between the companies of the Alcatel Lucent group and their employees. FCP 2AL is categorized as a mutual fund invested in listed securities of the company (FCPE investi en titres cotés de l’entreprise). FCP 2AL’s management objective is to enable the unit holders to participate in Alcatel Lucent’s development by investing a minimum of 95% of assets managed by FCP 2AL in Alcatel Lucent Shares, the remainder being invested in Euro monetary UCITS (OPCVM Monétaire Euro) and/or liquid instruments. FCP 2AL’s performance mirrors the performance of the Alcatel Lucent Shares both upwards and downwards.

The mutual fund supervisory board (conseil de surveillance du Fonds Commun de Placement Actionnariat) of FCP 2AL, which held 1.16% of Alcatel Lucent’s share capital and 2.30% of voting rights of Alcatel Lucent as of June 30, 2015, will decide whether or not to tender the Alcatel Lucent Shares it holds. It will announce such determination in a press release. If such Alcatel Lucent Shares are tendered into the Exchange Offer the supervisory board of FCP 2AL will amend the rules of the fund, subject to approval of these amendments by the AMF, in order to substitute any reference in the plan to “Alcatel Lucent” by “Nokia”.

Alcatel Lucent will and will cause each of its subsidiaries to tender into the Exchange Offer all Alcatel Lucent Securities held by Alcatel Lucent or any of its subsidiaries as of November 18, 2015, the expected date of the opening of the Exchange Offer, other than those Alcatel Lucent Securities (i) to be granted in lieu of accelerated Alcatel Lucent Performance Shares and (ii) in lieu of the Alcatel Lucent Stock Options Plan that Alcatel Lucent’s board of directors had considered granting in respect of the year ended December 31, 2014.

As of October 31, 2015, the last practicable day before the opening of the Exchange Offer, Alcatel Lucent and its subsidiaries held 40 115 700 Alcatel Lucent Shares in treasury, of which (i) 18 307 676 Alcatel Lucent Shares were reserved to be granted in lieu of accelerated Alcatel Lucent Performance Shares and (ii) 3 513 332 Alcatel Lucent Shares were reserved to be granted in lieu of the Alcatel Lucent Stock Option plan that the Alcatel Lucent board of directors had considered granting in respect of the year ended December 31, 2015.

For further information on the undertaking to tender accelerated Alcatel Lucent Stock Options and Performance Shares, see the section entitled “The Memorandum of Understanding—Additional Exchange Mechanism”.

Opinions of Alcatel Lucent’s Financial Advisor

Alcatel retained Zaoui as financial advisor to Alcatel Lucent’s board of directors in connection with the Exchange Offer and the other transactions contemplated by the Memorandum of Understanding, which are collectively referred to as the “Transaction” throughout this section. In connection with this engagement, Alcatel Lucent’s board of directors requested that, prior to Alcatel Lucent entering into the Memorandum of Understanding, Zaoui provide an opinion as to the fairness from a financial point of view to the holders (other than Nokia and its affiliates) of Alcatel Lucent Shares, including Alcatel Lucent ADSs, of the exchange ratio to be paid to such holders pursuant to the Exchange Offer.

On April 14, 2015, Zaoui delivered to Alcatel Lucent’s board of directors its oral opinion, which was subsequently confirmed by delivery of a written opinion dated as of such date, to the effect that, as of such date and based upon and subject to the assumptions made, procedures followed, matters considered, and qualifications and limitations described in its written opinion, the exchange ratio

 

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proposed to be paid to the holders (other than Nokia and its affiliates) of Alcatel Lucent Shares, Alcatel Lucent ADSs, pursuant to the Exchange Offer was fair from a financial point of view to such holders.

Alcatel Lucent’s board of directors further requested that, prior to determining that the Exchange Offer was in the interests of Alcatel Lucent and its stakeholders (including holders of Alcatel Lucent Securities) and recommending that holders of Alcatel Lucent Shares tender their Alcatel Lucent Shares into the Exchange Offer, Zaoui update its fairness opinion. On October 28, 2015, Zaoui delivered to Alcatel Lucent’s board of directors its oral opinion, which was subsequently confirmed by delivery of a written opinion dated as of such date, to the effect that, as of such date and based upon and subject to the assumptions made, procedures followed, matters considered, and qualifications and limitations described in its written opinion, the exchange ratio proposed to be paid to the holders (other than Nokia and its affiliates) of Alcatel Lucent Shares, Alcatel Lucent ADSs, pursuant to the Exchange Offer was fair from a financial point of view to such holders.

The full text of Zaoui’s written opinions dated April 14, 2015 and October 28, 2015, which set forth a description of the assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Zaoui in preparing its opinions, are attached as Annex B-I and Annex B-II, respectively, to this exchange offer/prospectus. The summary of the written opinions of Zaoui contained in this exchange offer/prospectus are qualified in their entirety by the full text of Zaoui’s written opinions. Zaoui’s advisory services and opinions were provided for the information and assistance of Alcatel Lucent’s board of directors in connection with its consideration of the Transaction and whether to determine that the Exchange Offer was in the interests of Alcatel Lucent and its stakeholders (including holders of Alcatel Lucent Securities) and recommend the Exchange Offer to holders of Alcatel Lucent Securities and may not be used for any other purpose without Zaoui’s prior written consent. ln addition, Zaoui’s opinions do not constitute a recommendation as to whether any holder of Alcatel Lucent Shares, including Alcatel Lucent ADSs, should tender their Alcatel Lucent Shares or Alcatel Lucent ADSs into the Exchange Offer or as to any other matter.

Zaoui expressed no opinion in either its April 14, 2015 opinion or its October 28, 2015 opinion as to the fairness from a point of view of the exchange ratio to be paid to the holders of the OCEANEs. Zaoui further noted that the Memorandum of Understanding provides that (i) if 95% or more of either (A) Alcatel Lucent Shares and voting rights or (B) Alcatel Lucent Shares and Alcatel Lucent Shares issuable upon conversion of the OCEANEs, in each case are owned by Nokia at the closing of the Exchange Offer, then Nokia shall implement a squeeze-out of the remaining Alcatel Lucent Shares and/or OCEANEs, as applicable within three months of closing the Exchange Offer or, if applicable, the subsequent offering period for the Exchange Offer; or (ii) if Nokia own less than 95% of Alcatel Lucent Shares or voting rights attached to Alcatel Lucent Shares at the closing of the Exchange Offer or, if applicable, the subsequent offering period for the Exchange Offer, Nokia reserves the right to (a) commence a mandatory buy-out of Alcatel Lucent Shares pursuant to Article 236-3 of the AMF General Regulation if at any time it owns 95% or more of the voting rights attached to Alcatel Lucent Shares, (b) commence at any time a simplified offer for Alcatel Lucent Shares pursuant to Article 233-1 et seq. of the AMF General Regulation, or (c) cause Alcatel to be merged into Nokia or an affiliate thereof, contribute assets to, merge certain of its subsidiaries with, or undertake other reorganizations of, Alcatel Lucent. Zaoui did not express any opinion in either its April 14, 2015 opinion or its October 28, 2015 opinion on any such transaction described in the preceding sentence.

In connection with rendering the opinions described above and performing its related financial analyses, Zaoui reviewed, among other things:

 

•

a draft of the Memorandum of Understanding;

 

•

annual reports to shareholders of Alcatel Lucent and Annual Reports on Form 20-F of Alcatel Lucent for the three fiscal years ended December 31, 2014;

 

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•

annual reports to shareholders of Nokia and Annual Reports on Form 20-F of Nokia for the three fiscal years ended December 31, 2014;

 

•

certain interim reports to shareholders of each of Alcatel Lucent and Nokia;

 

•

certain other communications from Alcatel Lucent to its shareholders and from Nokia to its shareholders;

 

•

certain publicly available research analyst reports for Alcatel Lucent and Nokia;

 

•

with respect to the opinion delivered on April 14, 2015, certain publicly available forecasts for Alcatel Lucent available as of April 13, 2015, which forecasts were derived from the arithmetic average of available financial metrics for Alcatel Lucent published by analysts determined by Zaoui to be of international repute and which forecasts were sufficiently detailed for use in Zaoui’s financial analysis (the “Alcatel Lucent Street Forecasts”);

 

•

with respect to the opinion delivered on April 14, 2015, certain publicly available forecasts for Nokia available as of April 13, 2015, which forecasts were derived from the arithmetic average of available financial metrics for Nokia published by analysts determined by Zaoui to be of international repute and which forecasts were sufficiently detailed for use in Zaoui’s financial analysis (the “Nokia Street Forecasts”);

 

•

with respect to the opinion delivered on October 28, 2015, certain publicly available forecasts for Alcatel Lucent published after announcement of the Transaction and available as of October 27, 2015, which forecasts were derived from the arithmetic average of available financial metrics for Alcatel Lucent published by analysts determined by Zaoui to be of international repute and which forecasts were sufficiently detailed for use in Zaoui’s financial analysis (the “Updated Alcatel Lucent Street Forecasts”);

 

•

with respect to the opinion delivered on October 28, 2015, certain publicly available forecasts for Nokia published after announcement of the Transaction and available as of October 27, 2015, which forecasts were derived from the arithmetic average of available financial metrics for Nokia published by analysts determined by Zaoui to be of international repute and which forecasts were sufficiently detailed for use in Zaoui’s financial analysis (the “Updated Nokia Street Forecasts”); and

 

•

certain publicly available operating and financial synergies estimates by the management of Nokia to result from the Exchange Offer (the “Synergies”).

Zaoui also participated in discussions with members of the senior managements of Alcatel Lucent and Nokia regarding their assessment of the strategic rationale for, and the potential benefits of, the Exchange Offer and the past and current business operations, financial condition and future prospects of Alcatel Lucent and Nokia; reviewed the reported price and trading activity for Alcatel Lucent Shares and Nokia Shares; compared certain financial and stock market information for Alcatel Lucent and Nokia with similar information for certain other companies the securities of which are publicly traded; reviewed the financial terms of certain recent comparable business combinations; and performed such other studies and analyses, and considered such other factors, as Zaoui deemed appropriate.

For purposes of rendering its opinions, Zaoui, with the consent of Alcatel Lucent, relied upon and assumed the accuracy and completeness of all of the financial, legal, regulatory, tax, accounting and other information provided to, discussed with or reviewed by, it, without assuming any responsibility for independent verification thereof. In that regard, Zaoui assumed, with the consent of Alcatel Lucent, with respect to the opinion delivered on April 14, 2015, that Alcatel Lucent Street Forecasts and Nokia Street Forecasts, and, with respect to the opinion delivered on October 28, 2015, the Updated Alcatel Lucent Street Forecasts and the Updated Nokia Street Forecasts, in each case were a reasonable basis upon which to evaluate the business and financial prospects of Alcatel Lucent and Nokia, respectively, and Zaoui also assumed that the Synergies had been reasonably prepared on a basis reflecting the best currently available estimates and judgments of Nokia’s management. Zaoui had not made an independent evaluation or appraisal of the assets and liabilities (including any contingent, derivative or other off-balance sheet assets and liabilities) of Alcatel Lucent or Nokia or any of their

 

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respective subsidiaries and Zaoui had not been furnished with any such evaluation or appraisal. Zaoui assumed that all governmental, regulatory or other consents and approvals necessary for the completion of the Transaction would be obtained without any adverse effect on Alcatel Lucent or Nokia or on the expected benefits of the Transaction in any way meaningful to its analysis. Zaoui assumed that the Transaction would be consummated on the terms set forth in the draft Memorandum of Understanding, without the waiver or modification of any term or condition the effect of which would be in any way meaningful to its analysis.

Zaoui’s opinions did not address the underlying business decision of Alcatel Lucent to engage in the Transaction, or the relative merits of the Transaction as compared to any strategic alternatives that may be available to Alcatel Lucent, or the decision of Alcatel Lucent’s board of directors to determine that the Exchange Offer was in the interests of Alcatel Lucent and its stakeholders (including holders of Alcatel Lucent Securities) or recommend the Exchange Offer to holders of Alcatel Lucent Securities; nor did it address any legal, tax, regulatory or accounting matters. Zaoui was not authorized to conduct a process to solicit, and did not conduct a process to solicit, interest from any other third party with respect to any business combination or other extraordinary transaction in each case involving the sale of all or substantially all of the Alcatel Lucent Shares and/or assets of Alcatel Lucent. Zaoui’s opinions address only the fairness from a financial point of view to the holders (other than Nokia and its affiliates) of Alcatel Lucent Shares, including Alcatel Lucent ADSs, as of the date of opinions, of the exchange ratio to be paid to such holders pursuant to the Memorandum of Understanding. Zaoui did not express any view on, and opinions did not address, any other term or aspect of the Memorandum of Understanding or the Transaction or any term or aspect of any other agreement or instrument contemplated by the Memorandum of Understanding or entered into or amended in connection with the Transaction, including, the form or structure of the Transaction or the likely timeframe in which the Transaction will be consummated, the fairness of the Transaction to, or any consideration received in connection therewith by, the holders of any other class of securities (including holders of OCEANEs), creditors, or other constituencies of Alcatel Lucent; nor as to the fairness of the amount or nature of any compensation to be paid or payable to any of the officers, directors or employees of Alcatel Lucent, or class of such persons, in connection with the Transaction, whether relative to the exchange ratio to be paid to the holders of Alcatel Lucent Shares, including Alcatel Lucent ADSs, pursuant to the Memorandum of Understanding or otherwise. Zaoui did not express any opinion as to the prices at which Nokia’s shares will trade at any time or as to the impact of the Transaction on the solvency or viability of Alcatel Lucent or Nokia or the ability of Alcatel Lucent or Nokia to pay their respective obligations when they become due. Zaoui’s opinions were necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to Zaoui as of, the date of such opinion and Zaoui assumed no responsibility for updating, revising or reaffirming any opinion given by it based on circumstances, developments or events occurring after the date of such opinion, it being understood that subsequent developments may affect any opinion given by Zaoui and the assumptions used in preparing it.

Summary of Zaoui’s Financial Analysis Relating to its April 14, 2015 Opinion

The following is a summary of the material financial analyses prepared and reviewed with Alcatel Lucent’s board of directors in connection with the opinion delivered on April 14, 2015. The following summary, however, does not purport to be a complete description of the financial analyses performed or factors considered by, and underlying the opinion of, Zaoui, nor does the order of the financial analyses described represent the relative importance or weight given to those financial analyses by Zaoui. Zaoui may have deemed various assumptions more or less probable than other assumptions, so the reference ranges resulting from any particular portion of the analyses summarized below should not be taken to be Zaoui’s view of the actual exchange ratio. Some of the summaries of the financial analyses set forth below include information presented in tabular format. In order to fully understand the financial analyses, the tables must be read together with the text of each summary, as the tables alone do not constitute a complete description of the financial analyses performed by Zaoui. Considering the data in the tables below without considering all financial analyses or factors or the full

 

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narrative description of such analyses or factors, including the methodologies and assumptions underlying such analyses or factors, could create a misleading or incomplete view of the processes underlying Zaoui’s financial analyses and its opinion.

Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before April 13, 2015, and is not necessarily indicative of current market conditions.

The implied exchange ratio reference ranges described below were calculated using the number of Alcatel Lucent Shares outstanding on a fully diluted basis and the number of Nokia Shares outstanding on a fully diluted basis, in each case calculated on a treasury share method basis, taking into account outstanding in-the-money stock options in relation to Alcatel Lucent Shares and Nokia Shares, respectively, Performance Shares and Nokia Performance Shares, respectively, other equity awards and convertible securities (including the OCEANEs, with equity dilution based on adjusted conversion ratio as per the clause relating to takeover bids, in accordance with the terms of the OCEANEs), based on information provided by Alcatel Lucent and Nokia.

Historical Exchange Ratio Analysis Relating to its April 14, 2015 Opinion

Zaoui reviewed the historical trading prices for the publicly-traded Alcatel Lucent Shares and Nokia Shares for the 52 weeks prior to April 13, 2015. Zaoui calculated historical average exchange ratios over various periods by dividing the VWAP of Alcatel Lucent Shares over such period by the VWAP of Nokia Shares over the same period. The term “VWAP” refers to the volume weighted average price during a reference period which is the weighted average prices at which the relevant share traded during such period relative to the volumes at which such share traded at such prices. Zaoui sourced its VWAP information from Bloomberg. Zaoui then compared those exchange ratios to the exchange ratio.

The table below sets forth the historical average exchange ratios over the periods specified.

 

Time Periods		Exchange Ratio
Spot (April 13, 2015)			0.497x
1-month VWAP			0.497x
3-month VWAP			0.475x
6-month VWAP			0.428x
12-month VWAP			0.435x

The historical exchange ratio analysis performed by Zaoui indicated a range of exchange ratios of 0.428x to 0.497x, as compared to the exchange ratio of 0.550x.

Analyst Price Target Analysis Relating to its April 14, 2015 Opinion

Zaoui reviewed the target prices published by a number of equity analysts on each of the Alcatel Lucent Shares and Nokia Shares. Zaoui believes that equity analysts’ target prices provide a relevant benchmark to assess the exchange ratio as a large number of equity analysts cover each of Alcatel Lucent and Nokia and publish recommendations and target prices for each of the companies. In conducting its analysis, Zaoui considered price targets as of April 13, 2015 published by equity analysts from banks of international repute that cover and provide price targets for both of Alcatel Lucent and Nokia, and used these price targets to calculate an implied exchange ratio.

The following table sets forth the range of implied exchange ratios based on analyst price targets.

 

Price Target		Implied Exchange Ratio
High			0.651x
Low			0.329x

 

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The analyst price targets analysis performed by Zaoui indicated a range of implied exchange ratios of 0.329x to 0.651x, as compared to the exchange ratio of 0.550x.

Premiums Paid Analysis Relating to its April 14, 2015 Opinion

In order to assess the premium offered to holders of Alcatel Lucent Shares in the Transaction relative to the premiums offered to shareholders in other transactions, Zaoui reviewed the premiums paid in precedent share exchange transactions in France (“Offre Publique d’Echange” or “OPE”) valued above EUR 1 billion since January 1, 2000, which transactions resulted in a change of control of the target company and where the consideration did not include a cash component. There were four such transactions in total reviewed by Zaoui for its analysis, which transactions are identified in the table below. The historical exchange ratios and implied premiums paid in these precedent share exchange transaction were disclosed in the relevant offering prospectuses filed with the AMF and publicly available on the AMF website. The mean of the premiums paid (calculated using the historical exchange ratios) in the precedent transactions reviewed were 23.0%, 21.7% and 19.5% over a 3-month, 6-month and 12-month period, respectively.

The following table sets forth the precedent transactions reviewed in connection with the premiums paid analysis.

 

Date Announced		Acquirer		Target
October 2014		Bolloré		Havas (63.8% stake)
May 2006		Fonciére des Régions		Bail Invest Fonciére (63% stake)
January 2001		Schneider Electric		Legrand
July 2000		Vinci		Groupe GTM

The premiums paid analysis performed by Zaoui indicated a range of implied exchange ratios of 0.520x to 0.589x, as compared to the exchange ratio of 0.550x. No company or transaction utilized in the premiums paid analysis is identical to Alcatel Lucent or Nokia or to the Transaction.

Selected Comparable Companies Analysis Relating to its April 14, 2015 Opinion

Alcatel Lucent Comparable Companies

Zaoui performed a selected comparable companies analysis with respect to Alcatel Lucent. For purposes of this analysis and comparison, Zaoui reviewed and analyzed certain financial information, valuation multiples and market trading data related to selected comparable publicly traded telecom equipment providers which it viewed, based on its professional judgment and experience and taking into account the company’s business profile, geographic region and size, as reasonably comparable or relevant for purposes of this analysis of Alcatel Lucent. No company, independently or as part of a set, is identical to Alcatel Lucent or its business segments. As part of its analysis, Zaoui determined that Alcatel Lucent is not directly comparable to any other European or American telecom equipment provider company due to the relative contribution and difference in profitability of its Core Networking versus its Access activities. As a consequence, Zaoui determined to use a different set of comparable companies for Alcatel Lucent in each of Core Networking and Access as set forth below:

Core Networking Peers:

 

•

Cisco Systems Inc.

 

•

Ericsson

 

•

Juniper Networks Inc.

 

•

Amdocs Limited

 

•

Ciena Corporation

 

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Access Peers:

 

•

Ericsson

 

•

ZTE Corporation

For each of the Alcatel Lucent comparable companies, Zaoui calculated and compared the ratio of such company’s enterprise value (calculated as the market capitalization of such company based on its closing share price on April 13, 2015, plus debt, less cash, cash equivalents and marketable securities, plus minorities and less associates) to such company’s estimated earnings before interest and taxes (or EBIT) for each of the years ending December 31, 2015 and 2016. The financial information for each of the selected companies listed above and used by Zaoui in its analysis was based on public filings, consensus estimates, recent equity research reports and other publicly available information.

The following table sets forth the average of the trading multiples for the Alcatel Lucent comparable companies considered in this analysis for each of the years ending December 31, 2015 and 2016.

 

		Average for Year Ended December 31,
Enterprise Value to Estimated EBIT		2015				2016
Core Networking			10.8x				9.5x
Access			14.8x				13.0x

In performing its analysis, Zaoui considered that price to earnings (or P/E) multiples tend to be very heterogeneous due to differences in depreciation and provisional accounting policies, as well as due to differences in capital structures, and that valuation based on P/E multiples is not commonly used by equity analysts in the telecom equipment provider sector, and therefore Zaoui determined not to undertake an analysis of the exchange ratio applying P/E multiples of comparable companies.

Nokia Comparable Companies

Zaoui performed a selected comparable companies analysis with respect to Nokia. For purposes of this analysis and comparison, Zaoui reviewed and analyzed certain financial information, valuation multiples and market trading data related to selected comparable publicly traded telecom equipment providers which it viewed, based on its professional judgment and experience and taking into account the company’s business profile, geographic region and size, as reasonably comparable or relevant for purposes of this analysis of Nokia. No company, independently or as part of a set, is identical to Nokia or its business segments. As part of its analysis, Zaoui determined that Nokia is not directly comparable to any other European or American telecom equipment provider company due to its business profile and difference in nature between its Nokia Networks, HERE and Nokia Technologies businesses. As a consequence, Zaoui determined to use a different set of comparable companies for each of its Nokia Networks, HERE and Nokia Technologies businesses as set forth below:

Nokia Networks Peers:

 

•

Cisco Systems Inc.

 

•

Ericsson

 

•

ZTE Corporation

 

•

Juniper Networks Inc.

HERE Peers:

 

•

TomTom NV

 

•

Garmin Limited

 

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Nokia Technologies Peers:

 

•

Interdigital Inc.

 

•

Universal Display Corporation

 

•

Tessera Technologies Inc.

 

•

Dolby Laboratories Inc.

For each of the Nokia comparable companies, Zaoui calculated and compared the ratio of such company’s enterprise value (calculated as the market capitalization of such company based on its closing share price on April 13, 2015, plus debt, less cash, cash equivalents and marketable securities, plus minorities and less associates) to such company’s (i) estimated earnings before interest, taxes, depreciation and amortization (or EBITDA), (ii) estimated earnings before interest and taxes (or EBIT) or (iii) estimated sales, in each case for the years ending December 31, 2015 and 2016. The financial information for each of the selected companies listed above and used by Zaoui in its analysis was based on public filings, consensus estimates, recent equity research reports and other publicly available information.

The following table sets forth the average of the trading multiples for the Nokia comparable companies considered in this analysis for each of the years ending December 31, 2015 and 2016.

 

		Average for Year Ended December 31,
Enterprise Value to Estimated		2015				2016
Nokia Networks EBITDA			9.4x				8.8x
HERE Sales(1)			2.2x				2.1x
Nokia Technologies EBIT			16.0x				13.8x

 

 

(1)	Given the difference in profitability of companies comparable to Nokia’s HERE business, Zaoui took into consideration sales multiples in valuing the HERE business.

Determination of Implied Exchange Ratio

Zaoui then calculated implied exchange ratio reference ranges on a fully diluted basis using the Alcatel Lucent Street Estimates and the Nokia Street Estimates by dividing the low end of the implied per share equity value reference range for Alcatel Lucent, by the low end of the implied per share equity value reference range for Nokia, in each case as indicated in the selected comparable companies analyses and shown in the table below, and by dividing the high end of the implied per share equity value reference range for Alcatel Lucent by the high end of the implied per share equity value reference range for Nokia, in each case as indicated in the selected comparable companies analyses and shown in the table below. In determining the implied equity value per share, Zaoui added to the implied enterprise value cash and cash equivalents and investments in associates and joint-ventures as of December 31, 2014 and subtracted from the implied enterprise value the value of debt and non-controlling interests as of December 31, 2014. The net financial debt of Alcatel Lucent and Nokia were restated for the conversion of all Alcatel Lucent and Nokia convertible instruments.

The following table sets forth the range of implied exchange ratios (on a fully diluted basis) based on a selected comparable companies analysis.

 

Fully Diluted Equity Value per Share		Alcatel Lucent				Nokia				Implied Exchange Ratio
High End		€	3.69			€	7.41				0.498x
Low End		€	3.56			€	6.86				0.520x

 

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The selected comparable companies analysis performed by Zaoui indicated a range of implied exchange ratios (on a fully diluted basis) of 0.498x to 0.520x, as compared to the exchange ratio of 0.550x.

Discounted Cash Flow Analysis Excluding Synergies Relating to its April 14, 2015 Opinion

A discounted cash flow analysis is a method of evaluating an asset using estimates of the future unlevered free cash flow generated by the asset and taking into consideration the time value of money with respect to those future cash flows by calculating their “present value”. Present value refers to the current value of estimated future cash flows generated by the asset, and is obtained by discounting those cash flows (including the asset’s terminal value) back to the present using a discount rate that takes into account macroeconomic assumptions and estimates of risk, the opportunity cost of capital, capitalized returns and other relevant factors. Terminal value refers to the capitalized value of all estimated cash flows generated by an asset during beyond the final forecast period.

Alcatel Lucent DCF

Zaoui performed a discounted cash flow analysis for Alcatel Lucent, without regards to the Synergies, to calculate the estimated net present value of (1) the standalone unlevered free cash flows (calculated as EBIT adjusted for tax, depreciation, amortization, restructuring charges, change in working capital and capital expenditures that Alcatel Lucent was projected to generate during the time period from January 1, 2015 to December 31, 2019, based on the Alcatel Lucent Street Forecasts and extrapolated by Zaoui until 2019; and (2) the terminal value for Alcatel Lucent. Zaoui, using its professional judgment and expertise, calculated a range of terminal values for Alcatel Lucent at the end of the forecast period by applying a perpetual growth rate ranging from 1.5% to 2.5% of the unlevered free cash flow of Alcatel Lucent for the terminal period based on the Alcatel Lucent Street Forecasts. The unlevered free cash flows and the range of terminal values were then discounted to present values using a range of discount rates from 9.0% to 10.0%, which were based on Alcatel Lucent’s weighted average cost of capital. Zaoui took the sum of the present value ranges for Alcatel Lucent’s future cash flows and terminal value to calculate a range of implied enterprise values, and then added to such implied enterprise value cash and cash equivalents and investments in associates and joint-ventures as of December 31, 2014, subtracted the value of Alcatel Lucent’s debt as of December 31, 2014 (assuming full dilution from the OCEANEs) and subtracted the value of non-controlling interests as of December 31, 2014 to arrive at a range of implied equity value per Alcatel Lucent Share of EUR 3.37 to EUR 4.18.

The following table sets forth projected unlevered free cash flows of Alcatel Lucent for the periods indicated that were used by Zaoui in its discounted cash flow analysis. These projections were based on information contained in the Alcatel Lucent Street Forecasts and extrapolated by Zaoui.

 

Year Ended December 31,

2015E

2016E

2017E

2018E

2019E

(in EUR million)

Unlevered free cash flow

445

806

1 113

1 136

1 220

Nokia DCF

Zaoui performed a discounted cash flow analysis for Nokia, without regards to the Synergies, to calculate the estimated net present value of (1) the standalone unlevered free cash flows (calculated as EBIT adjusted for tax, depreciation, amortization, change in working capital and capital expenditures that Nokia was projected to generate during the time period from January 1, 2015 to December 31, 2019, based on the Nokia Street Forecasts and extrapolated by Zaoui until 2019; and (2) the terminal

 

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value for Nokia. Zaoui, using its professional judgment and expertise, calculated a range of terminal values for Nokia at the end of the forecast period by applying a perpetual growth rate ranging from 1.5% to 2.5% of the unlevered free cash flow of Nokia for the terminal period based on the Nokia Street Forecasts. The unlevered free cash flows and the range of terminal values were then discounted to present values using a range of discount rates from 8.5% to 9.5%, which were based on Nokia’s weighted average cost of capital. Zaoui took the sum of the present value ranges for Nokia’s future cash flows and terminal value to calculate a range of implied enterprise values, and then added to such implied enterprise value cash and cash equivalents and investments in associates and joint-ventures as of December 31, 2014, subtracted the value of Nokia’s debt as of December 31, 2014 (assuming full dilution from the convertible bonds) and subtracted the value of non-controlling interests as of December 31, 2014 to arrive at a range of implied equity value per Nokia Share of EUR 6.41 to EUR 7.78.

The following table sets forth projected unlevered free cash flows of Nokia for the periods indicated that were used by Zaoui in its discounted cash flow analysis. These projections were based on information contained in the Nokia Street Forecasts and extrapolated by Zaoui.

 

Year Ended December 31,

2015E

2016E

2017E

2018E

2019E

(in EUR million)

Unlevered free cash flow

1 461

1 530

1 517

1 569

1 677

Implied Exchange Ratio

Zaoui then calculated an implied exchange ratio reference range on a fully diluted basis by dividing the low end of the implied per share equity value reference range for Alcatel Lucent by the low end of the implied per share equity value reference range for Nokia, in each case indicated by the discounted cash flow analyses, and by dividing the high end of the implied per share equity value reference range for Alcatel Lucent by the high end of the implied per share equity value reference range for Nokia, in each case indicated by the discounted cash flow analyses.

The following table sets forth the range of implied exchange ratios (on a fully diluted basis) based on a discounted cash flow analysis excluding synergies.

 

Fully Diluted Equity Value per Share		Alcatel Lucent				Nokia				Implied Exchange Ratio
High End		€	4.18			€	7.78				0.537x
Low End		€	3.37			€	6.41				0.525x

The discounted cash flow analysis excluding synergies performed by Zaoui indicated a range of implied exchange ratios (on a fully diluted basis) of 0.537x to 0.525x, as compared to the exchange ratio of 0.550x.

Summary of Zaoui’s Financial Analysis Relating to its October 28, 2015 Opinion

The following is a summary of the material financial analyses prepared and reviewed with Alcatel Lucent’s board of directors in connection with the written opinion dated October 28, 2015. The following summary, however, does not purport to be a complete description of the financial analyses performed or factors considered by, and underlying the opinion of, Zaoui, nor does the order of the financial analyses described represent the relative importance or weight given to those financial analyses by Zaoui. Zaoui may have deemed various assumptions more or less probable than other assumptions, so the reference ranges resulting from any particular portion of the analyses summarized below should not be taken to be Zaoui’s view of the actual exchange ratio. Some of the summaries of

 

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the financial analyses set forth below include information presented in tabular format. In order to fully understand the financial analyses, the tables must be read together with the text of each summary, as the tables alone do not constitute a complete description of the financial analyses performed by Zaoui. Considering the data in the tables below without considering all financial analyses or factors or the full narrative description of such analyses or factors, including the methodologies and assumptions underlying such analyses or factors, could create a misleading or incomplete view of the processes underlying Zaoui’s financial analyses and its opinion.

Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before April 13, 2015, and is not necessarily indicative of current market conditions.

The implied exchange ratio reference ranges described below were calculated using the number of Alcatel Lucent Shares outstanding on a fully diluted basis as of June 30, 2015 and the number of Nokia Shares outstanding on a fully diluted basis as of June 30, 2015, in each case calculated on a treasury share method basis, taking into account outstanding in-the-money stock options in relation to Alcatel Lucent Shares and Nokia Shares, respectively, Performance Shares and Nokia Performance Shares, respectively, other equity awards and convertible securities (including the OCEANEs, with equity dilution based on an adjusted conversion ratio as per the clause relating to takeover bids, in accordance with the terms of the OCEANEs), based on information provided by Alcatel Lucent and Nokia.

Historical Exchange Ratio Analysis Relating to its October 28, 2015 Opinion

Zaoui determined that historical trading prices for the publicly-traded Alcatel Lucent Shares and Nokia Shares after April 13, 2015 were not relevant as such trading prices had been impacted by the announcement of the Transaction. Therefore, the analysis described in the section entitled “—Historical Exchange Ratio Analysis Relating to its April 14, 2015 Opinion” continued to be the relevant analysis as it related to historical exchange ratios.

Analyst Price Target Analysis Relating to its October 28, 2015 Opinion

Zaoui determined that price targets published by equity analysts on each of the Alcatel Lucent Shares and Nokia Shares on and after April 13, 2015 were not relevant as such market data had been impacted by the announcement of the Transaction. Therefore, the analysis described in the section entitled “—Analyst Price Target Analysis Relating to its April 14, 2015 Opinion” continued to be the relevant analysis as it related to analyst price targets.

Premiums Paid Analysis Relating to its October 28, 2015 Opinion

No share exchange transactions (“Offre Publique d’Echange” or “OPE”) valued above EUR 1 billion were announced on or after April 13, 2015 in France. Therefore, the analysis described in the section entitled “—Premiums Paid Analysis Relating to its April 14, 2015 Opinion” continued to be the relevant analysis as it related to premiums paid in precedent share exchange transactions in France.

Selected Comparable Companies Analysis Relating to its October 28, 2015 Opinion

Alcatel Lucent Comparable Companies

Zaoui updated its selected comparable companies analysis with respect to Alcatel Lucent. For purposes of this analysis and comparison, Zaoui reviewed and analyzed certain financial information, valuation multiples and market trading data through October 27, 2015 related to selected comparable

 

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publicly traded telecom equipment providers which it viewed, based on its professional judgment and experience and taking into account the company’s business profile, geographic region and size, as reasonably comparable or relevant for purposes of this analysis of Alcatel Lucent. No company, independently or as part of a set, is identical to Alcatel Lucent or its business segments. As part of its analysis, Zaoui determined that Alcatel Lucent is not directly comparable to any other European or American telecom equipment provider company due to the relative contribution and difference in profitability of its Core Networking versus its Access activities. As a consequence, Zaoui determined to use a different set of comparable companies for Alcatel Lucent in each of Core Networking and Access as set forth below:

Core Networking Peers:

 

•

Cisco Systems Inc.

 

•

Ericsson

 

•

Juniper Networks Inc.

 

•

Amdocs Limited

 

•

Ciena Corporation

Access Peers:

 

•

Ericsson

 

•

ZTE Corporation

For each of the Alcatel Lucent comparable companies, Zaoui calculated and compared the ratio of such company’s enterprise value (calculated as the market capitalization of such company based on its closing share price on October 27, 2015, plus debt, less cash, cash equivalents and marketable securities, plus minorities and less associates) to such company’s estimated earnings before interest and taxes (or EBIT) for each of the years ending December 31, 2015 and 2016. The financial information for each of the selected companies listed above and used by Zaoui in its analysis was based on public filings, consensus estimates, recent equity research reports and other publicly available information.

The following table sets forth the average of the trading multiples for the Alcatel Lucent comparable companies considered in this analysis for each of the years ending December 31, 2015 and 2016.

 

		Average for Year Ended December 31,
Enterprise Value to Estimated EBIT		2015				2016
Core Networking			11.0x				9.7x
Access			12.9x				11.1x

In performing its analysis, Zaoui considered that price to earnings (or P/E) multiples tend to be very heterogeneous due to differences in depreciation and provisional accounting policies, as well as due to differences in capital structures, and that valuation based on P/E multiples is not commonly used by equity analysts in the telecom equipment provider sector, and therefore Zaoui determined not to undertake an analysis of the exchange ratio applying P/E multiples of comparable companies.

Nokia Comparable Companies

Zaoui updated its selected comparable companies analysis with respect to Nokia. For purposes of this analysis and comparison, Zaoui reviewed and analyzed certain financial information, valuation

 

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multiples and market trading data through October 27, 2015 related to selected comparable publicly traded telecom equipment providers which it viewed, based on its professional judgment and experience and taking into account the company’s business profile, geographic region and size, as reasonably comparable or relevant for purposes of this analysis of Nokia. No company, independently or as part of a set, is identical to Nokia or its business segments. As part of its analysis, Zaoui determined that Nokia is not directly comparable to any other European or American telecom equipment provider company due to its business profile and difference in nature between its Nokia Networks and Nokia Technologies businesses. As a consequence, Zaoui determined to use a different set of comparable companies for each of its Nokia Networks and Nokia Technologies businesses as set forth below.

Nokia Networks Peers:

 

•

Cisco Systems Inc.

 

•

Ericsson

 

•

ZTE Corporation

 

•

Juniper Networks Inc.

Nokia Technologies Peers:

 

•

Interdigital Inc.

 

•

Universal Display Corporation

 

•

Tessera Technologies Inc.

 

•

Dolby Laboratories Inc.

On August 3, 2015, Nokia announced an agreement to sell its HERE digital mapping and location services business at an enterprise value of EUR 2.8 billion. Zaoui has considered this transaction value in its comparable companies analysis, Zaoui noted that the enterprise value of HERE was consistent with Zaoui’s valuation for the business.

For each of the Nokia comparable companies, Zaoui calculated and compared the ratio of such company’s enterprise value (calculated as the market capitalization of such company based on its closing share price on October 27, 2015, plus debt, less cash, cash equivalents and marketable securities, plus minorities and less associates) to such company’s (i) estimated earnings before interest, taxes, depreciation and amortization (or EBITDA) or (ii) estimated earnings before interest and taxes (or EBIT), in each case for the years ending December 31, 2015 and 2016. The financial information for each of the selected companies listed above and used by Zaoui in its analysis was based on public filings, consensus estimates, recent equity research reports and other publicly available information.

The following table sets forth the average of the trading multiples for the Nokia comparable companies considered in this analysis for each of the years ending December 31, 2015 and 2016.

 

		Average for Year Ended December 31,
Enterprise Value to Estimated		2015				2016
Nokia Networks EBITDA			9.1x				8.5x
Nokia Technologies EBIT