Nokia shares spike on report of takeover bid

This post was originally published on this site

Shares in Nokia rose almost 4% on Friday, after a media report said the Finnish telecommunications group had hired bankers to defend itself against a potential hostile takeover.

Online telecom newspaper TMT Finance said Nokia NOK, +7.12% had hired Citi group to devise a defense strategy which could value the Finnish telecoms group at more than $17 billion.

Nokia hasn’t yet made any statement about the report, which follows a similar one in February from Bloomberg that said the telecoms group was exploring strategic options and working with advisers to consider potential asset sales and mergers.

Shares in Nokia NOKIA, +2.90% were up 3.82% in early morning trading on Friday.

Analysts have said that a full-blown merger with a rival would almost certainly attract scrutiny from antitrust regulators. JPMorgan suggested in a research note that a combination with Samsung Electronics could be “more likely but not substantially so.”

Shares in Nokia have fallen almost 46 % in the past year as the company faces intense competition and rising costs in a battle to get its 5G networks up and running. Nokia stock has bounced back, however, gaining roughly 43% from mid-March to mid-April.

The company has taken several steps to try to accelerate its 5G strategy, lowering its cost savings target in January to invest more on its 5G development, which promises faster connectivity for mobile phones and to enable driverless cars.

In March, it announced the resignation of Chief Executive Rajeev Suri with Pekka Lundmark appointed to help turn the company’s fortunes.

However, the Finnish company has fallen behind its rivals, including China’s Huawei’s and Sweden’s Ericsson ERIC.B, +2.84% At the end of February, Nokia said it had signed 68 commercial 5G contracts worldwide, including all four nationwide operators in the U.S. That compares with Huawei’s tally of 91 5G contracts and Ericsson’s total of 81.

Add Comment