SC 14D9 1 d71658dsc14d9.htm SC 14D9 SC 14D9
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LOGO

November 18, 2015

Dear Alcatel Lucent Security Holder,

On behalf of Alcatel Lucent’s board of directors, I am pleased to inform you that Nokia Corporation today commenced an offer to exchange all Alcatel Lucent’s outstanding ordinary shares held by U.S. holders, American depositary shares representing ordinary shares, wherever located, and OCEANEs held by U.S. holders, for Nokia Corporation ordinary shares or American depositary shares, as applicable. The remainder of Alcatel Lucent’s outstanding ordinary shares and OCEANEs, which are held by persons outside the U.S., are the subject of a parallel public exchange offer in France. The U.S. offer and French offer are being made pursuant to a Memorandum of Understanding, dated April 15, 2015, as amended, between Alcatel Lucent and Nokia Corporation.

At their meeting of October 28, 2015 and as a result of the matters described in the section entitled “Item 4. The Solicitation or Recommendation—Reasons for Alcatel Lucent’s Board Recommendation” in the enclosed Alcatel Lucent Solicitation / Recommendation Statement on Schedule 14D-9, 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 ordinary shares and holders of other Alcatel Lucent securities);

 

  (ii) recommended that all holders of Alcatel Lucent ordinary shares and holders of Alcatel Lucent American depositary shares tender their Alcatel Lucent ordinary shares and/or their Alcatel Lucent American depositary shares pursuant to the exchange offer; and

 

  (iii) recommended that all holders of OCEANEs tender their OCEANEs pursuant to the exchange offer.

A copy of the Alcatel Lucent Solicitation / Recommendation Statement on Schedule 14D-9 is enclosed. It contains additional information relating to the exchange offer in the United States, including a description of the reasons for the determination and recommendation described above. Also enclosed are Nokia Corporation’s U.S. Exchange Offer / Prospectus, dated November 12, 2015, letters of transmittal for use in tendering your Alcatel Lucent securities and other related documents. These documents set forth the terms and conditions of the exchange offer in the United States. We urge you to read the enclosed information and consider it carefully before tendering any of your Alcatel Lucent securities.

On behalf of Alcatel Lucent’s board of directors, we thank you for your support.

Sincerely,

 

LOGO

Philippe Camus

Chairman and Chief Executive Officer


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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14D-9

(RULE 14d-101)

SOLICITATION/RECOMMENDATION STATEMENT

UNDER SECTION 14(d)(4) OF THE SECURITIES EXCHANGE ACT OF 1934

 

 

Alcatel Lucent

(Name of Subject Company)

 

 

Alcatel Lucent

(Name of Persons Filing Statement)

 

 

Ordinary shares, nominal value EUR 0.05 per ordinary share

American Depositary Shares, each representing one ordinary share, nominal value

EUR 0.05 per ordinary share

(Title of Class of Securities)

 

 

FR0000130007

013904305

(CUSIP Number of Class of Securities)

 

 

Jean Raby

Chief Financial and Legal Officer

Alcatel Lucent

148/152 Route de la Reine

92100 Boulogne-Billancourt

France

Telephone Number +33 (1) 55 14 10 10

Facsimile Number +33 (1) 55 14 14 05

(Name, address and telephone numbers of person authorized to receive notices and

communications on behalf of the persons filing statement)

With copies to:

 

Gauthier Blanluet

Sullivan & Cromwell LLP

24, rue Jean-Goujon

75008 Paris

France

Facsimile Number +33 (1) 73 04 10 10

 

Richard C. Morrissey

Sullivan & Cromwell LLP

1 New Fetter Lane

London EC4A 1AN

United Kingdom

Facsimile Number +44 (0) 20 7959 8950

 

¨ Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer.

 

 

 


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TABLE OF CONTENTS

 

     Page  

Item 1. Subject Company Information.

     1   

Item 2. Identity and Background of Filing Person.

     1   

Item 3. Past Contacts, Transactions, Negotiations and Agreements.

     4   

Item 4. The Solicitation or Recommendation.

     27   

Item 5. Persons/Assets, Retained, Employed, Compensated or Used.

     86   

Item 6. Interest in Securities of the Subject Company.

     87   

Item 7. Purposes of the Transaction and Plans or Proposals.

     88   

Item 8. Additional Information.

     88   

Item 9. Exhibits.

     96   

ANNEX A: Opinion of Zaoui & Co. S.A., dated April 14, 2015.

     A-1   

ANNEX B: Opinion of Zaoui & Co. S.A., dated October 28, 2015.

     B-1   

ANNEX C: Unofficial English Translations of Independent Expert Report of Associés en Finance, dated October 28, 2015, and Addendum, dated November 9, 2015.

     C-1   


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Item 1. Subject Company Information.

Name and Address

The name of the subject company is Alcatel Lucent, a French société anonyme (“Alcatel Lucent”). The address of Alcatel Lucent’s principal office is 148/152 route de la Reine, 92100 Boulogne-Billancourt, France. The telephone number of Alcatel Lucent’s principal executive office is +33 (1) 55 14 10 10.

Securities

This Solicitation/Recommendation Statement on Schedule 14D-9 (this “Schedule 14D-9”) relates to:

 

  (i) Alcatel Lucent’s ordinary shares, nominal value EUR 0.05 per share (“Alcatel Lucent Shares”);

 

  (ii) American Depositary Shares, evidenced by American Depositary Receipts, each representing one Alcatel Lucent Share (“Alcatel Lucent ADSs”);

 

  (iii) EUR 628 946 424 Alcatel Lucent bonds convertible/exchangeable into new Alcatel Lucent Shares or exchangeable for existing Alcatel Lucent Shares due on July 1, 2018 (“2018 OCEANEs”);

 

  (iv) EUR 688 425 000 Alcatel Lucent bonds convertible/exchangeable into new Alcatel Lucent Shares or exchangeable for existing Alcatel Lucent Shares due on January 30, 2019 (“2019 OCEANEs”); and

 

  (v) EUR 460 289 979.90 Alcatel Lucent bonds convertible/exchangeable into new Alcatel Lucent Shares or exchangeable for existing Alcatel Lucent Shares due on January 30, 2020 (“2020 OCEANEs” and, together with the 2018 OCEANEs and the 2019 OCEANEs, “OCEANEs” and the OCEANEs, together with the Alcatel Lucent Shares and the Alcatel Lucent ADSs, “Alcatel Lucent Securities”).

The Alcatel Lucent Shares and the Alcatel Lucent ADSs are registered pursuant to the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”). The OCEANEs are not registered pursuant to the Exchange Act.

As of October 31, 2015, the latest practicable date before the date of this Schedule 14D-9, there were 2 841 508 155 Alcatel Lucent Shares issued (including 472 058 361 Alcatel Lucent ADSs issued), of which 40 115 700 Alcatel Lucent Shares were held in treasury by Alcatel Lucent or its subsidiaries, EUR 349 413 670 2018 OCEANEs outstanding, EUR 167 500 000 2019 OCEANEs outstanding and EUR 114 499 995 2020 OCEANEs outstanding.

For further information on Alcatel Lucent Securities outstanding as of October 31, 2015, see the section entitled “Item 8. Additional Information—Alcatel Lucent Shares on a Fully Diluted Basis” below, which is incorporated herein by reference.

Item 2. Identity and Background of Filing Person.

Name and Address

Alcatel Lucent, the subject company, is the person filing this Schedule 14D-9. The name, business address and business telephone number of Alcatel Lucent are set forth in the section entitled “Item 1. Subject Company Information—Name and Address” above.

 

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Exchange Offer

This Schedule 14D-9 relates to an exchange offer comprised of two offers (separately, the “U.S. Offer” and the “French Offer” and collectively, the “Exchange Offer”) by Nokia Corporation, a Finnish Corporation (“Nokia”), as disclosed in the Tender Offer Statement on Schedule TO (together with the exhibits thereto, as amended, the “Schedule TO”), filed by Nokia with the U.S. Securities and Exchange Commission (the “SEC”) on November 18, 2015, the date of this Schedule 14D-9.

For every one Alcatel Lucent Share validly tendered into, and not withdrawn from, the U.S. Offer, holders will receive, 0.5500 of a share of Nokia (a “Nokia Share”). For every one Alcatel Lucent ADS validly tendered into, and not withdrawn from, the U.S. Offer, holders will receive 0.5500 of a Nokia American depositary share (a “Nokia ADS”), each Nokia ADS representing one Nokia Share. The ratio of 0.5500 Nokia Shares per one Alcatel Lucent Share is referred to as the “exchange ratio”. For every one 2018 OCEANE validly tendered into, and not withdrawn from, the U.S. Offer, holders will receive 0.6930 Nokia Shares, for every one 2019 OCEANE validly tendered into, and not withdrawn from, the U.S. Offer, holders will receive 0.7040 Nokia Shares, and for every one 2020 OCEANE validly tendered into, and not withdrawn from, the U.S. Offer, holders will receive 0.7040 Nokia Shares.

The U.S. Offer is being made on the terms and subject to the conditions set forth in section entitled “The Exchange Offer” in Nokia’s exchange offer/prospectus (the “exchange offer/prospectus”), which is part of a Registration Statement on Form F-4 filed by Nokia with the SEC on August 14, 2015, as amended from time to time (the “Form F-4”), and is incorporated by reference into the Schedule TO. A copy of the exchange offer/prospectus is included as Exhibit (a)(1) to this Schedule 14D-9 and the section entitled “The Exchange Offer” is incorporated herein by reference.

The French Offer to exchange 0.5500 Nokia Shares for every Alcatel Lucent Share, 0.6930 Nokia Shares for every 2018 OCEANE, 0.7040 Nokia Shares for every 2019 OCEANE and 0.7040 Nokia Shares for every 2020 OCEANE is being made pursuant to separate 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).

The Exchange Offer is being made pursuant to a Memorandum of Understanding, dated as of April 15, 2015 (as such agreement may be amended, supplemented or otherwise modified from time to time, the “Memorandum of Understanding”), by and between Alcatel Lucent and Nokia. A more complete description of the Memorandum of Understanding, including the Amendment to the Memorandum of Understanding, dated October 28, 2015, by and between Alcatel Lucent and Nokia (the “Memorandum of Understanding Amendment”), is included in the section entitled “The Memorandum of Understanding” in the exchange offer/prospectus. A copy of the exchange offer/prospectus is included as Exhibit (a)(1) to this Schedule 14D-9 and the section entitled the “Memorandum of Understanding” is incorporated herein by reference. The summary of Memorandum of Understanding and the Memorandum of Understanding Amendment included in the section entitled “The Memorandum of Understanding” in the exchange offer/prospectus does not purport to be complete and is qualified in its entirety by reference to the Memorandum of Understanding and the Memorandum of Understanding Amendment, copies of which are included as Exhibits (e)(1) and (e)(2), respectively, to this Schedule 14D-9 and are incorporated herein by reference.

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 Sanctions (as defined in the exchange offer/prospectus) may not participate in the U.S. Offer.

 

 

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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, 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 (“Performance Shares”) cannot be tendered in the Exchange Offer or the subsequent offering period, if any, unless such Performance Shares have vested and are not subject to transfer restrictions 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 Performance Shares in exchange for Alcatel Lucent Shares, subject to certain conditions.

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.

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.

Nokia’s obligation to accept, and to exchange, any Alcatel Lucent Securities validly tendered into the U.S. Offer is subject only 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 French stock market authority (Autorité des marchés financiers) (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 (the “Minimum Tender Condition”); and

 

   

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 (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 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 (the “Mandatory Minimum Acceptance Threshold”).

 

 

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Nokia, Alcatel Lucent and the holders of Alcatel Lucent Securities will not know whether the Minimum Tender Condition is satisfied before the publication by the AMF of the results of the French Offer (taking into account the results of the U.S. Offer). At such time, Nokia would determine, in its sole discretion, whether to waive the Minimum Tender Condition to any level at or above the Mandatory Minimum Acceptance Threshold.

The foregoing summary of the Exchange Offer does not purport to be complete and is qualified in its entirety by the more detailed description and explanations contained in the section entitled “The Exchange Offer” in the exchange offer/prospectus which is incorporated herein by reference.

Nokia’s registered office and its principal executive office is Karaportti 3, FI-02610 Espoo, Finland, and the telephone number is +358 (0) 10 448 8000, as set forth in the exchange offer/prospectus.

Information relating to the Exchange Offer, including this Schedule 14D-9 and related documents, can be found on the SEC’s website at www.sec.gov, or on Alcatel Lucent’s website at www.alcatel-lucent.com. Neither these websites nor the information on or available through them are a part of this Schedule 14D-9 or incorporated herein by reference, and should not be considered a part of this Schedule 14D-9.

Item 3. Past Contacts, Transactions, Negotiations and Agreements.

Except as described in this Schedule 14D-9, including documents incorporated herein by reference and the exhibits hereto, to the knowledge of Alcatel Lucent, as of the date of this Schedule 14D-9, there exists no material agreement, arrangement or understanding, nor any actual or potential conflict of interest, between Alcatel Lucent or its affiliates, on the one hand, and (i) any of Alcatel Lucent’s executive officers, directors or affiliates, or (ii) Nokia or any of Nokia’s executive officers, directors or affiliates, on the other hand.

Alcatel Lucent’s board of directors was aware of all such contracts, agreements, arrangements or understandings and any actual or potential conflicts of interest and considered them along with other matters set forth under “Item 4. The Solicitation or Recommendation—Reasons for Approving the Memorandum of Understanding” below and “Item 4. The Solicitation or Recommendation—Reasons for Alcatel Lucent’s Board Recommendation” below.

Relationship with Nokia

Memorandum of Understanding

A summary of the material terms of the Memorandum of Understanding is included in the section entitled “The Memorandum of Understanding” in the exchange offer/prospectus and is incorporated herein by reference. The summary in the exchange offer/prospectus may not contain all of the information about the Memorandum of Understanding that is important to holders of Alcatel Lucent Securities, and holders of Alcatel Lucent Securities are encouraged to read the Memorandum of Understanding, which is attached as Annex A to the exchange offer/prospectus, carefully in its entirety. The legal rights and obligations of Alcatel Lucent and Nokia are governed by the specific language of the Memorandum of Understanding and not the summary described in the section entitled “The Memorandum of Understanding” in the exchange offer/prospectus.

The Memorandum of Understanding contains representations, warranties and covenants by each of Nokia and Alcatel Lucent. These representations and warranties were (i) made solely for the benefit of the other party to the Memorandum of Understanding; (ii) were not intended to be treated as

 

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categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate; (iii) may have been qualified in the Memorandum of Understanding by disclosures that were made to the other party in connection with the negotiation of the Memorandum of Understanding; (iv) may apply contract standards of “materiality” that are different from “materiality” under the applicable securities laws; and (v) were made only as of the date of the Memorandum of Understanding, the French Offer filing date or such other date or dates as may be specified in the Memorandum of Understanding. Information concerning the subject matter of the representations, warranties and covenants may change after the date of the Memorandum of Understanding, which subsequent information may or may not be fully reflected in public disclosures. In addition, such representations, warranties and covenants may have been qualified by certain disclosures not reflected in the text of the Memorandum of Understanding and may apply standards of materiality and other qualifications and limitations in a way that is different from what may be viewed as material by holders of Alcatel Lucent Securities. Only Alcatel Lucent and Nokia are parties to the Memorandum of Understanding, which does not confer any rights upon or give any causes of action to the holders of Alcatel Lucent Securities. Neither holders of Alcatel Lucent Securities nor any other third parties should rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or conditions of Alcatel Lucent, Nokia, or any of their respective subsidiaries or affiliates.

Alcatel Lucent acknowledges that, notwithstanding the inclusion of the foregoing cautionary statements, it is responsible for considering whether additional specific disclosures of material information regarding material contractual provisions are required to make the statements in this Schedule 14D-9 not misleading.

The foregoing summary of Memorandum of Understanding and the Memorandum of Understanding Amendment does not purport to be complete and is qualified in its entirety by reference to the Memorandum of Understanding and the Memorandum of Understanding Amendment, copies of which are included as Exhibits (e)(1) and (e)(2), respectively, to this Schedule 14D-9 and are incorporated herein by reference.

Other Arrangements

In 2015, Nokia has reimbursed Alcatel Lucent approximately EUR 124 000 and USD 62 000 for out-of-pocket expenses paid by Alcatel Lucent to third parties for shareholder analysis at the request of Nokia in connection with the Exchange Offer, including shareholder analysis in accordance with Rule 14d-1 under the Exchange Act.

Arrangements with Executive Officers and Directors of Alcatel Lucent

Alcatel Lucent’s executive officers and directors may have interests in the Exchange Offer and the other transactions contemplated by the Memorandum of Understanding that are different from, or in addition to, the interests of the holders of Alcatel Lucent Securities generally. These interests may create potential conflicts of interest. Alcatel Lucent’s board of directors was aware of these interests and considered them, among other matters, in approving the Memorandum of Understanding and the transactions contemplated by the Memorandum of Understanding, as set forth under “Item 4. The Solicitation or Recommendation—Reasons for Approving the Memorandum of Understanding” below, and in determining that the Exchange Offer was 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) and recommending that all holders of Alcatel Lucent Securities tender their Alcatel Lucent Securities pursuant to the Exchange Offer, as set forth under “Item 4. The Solicitation or Recommendation—Reasons for Alcatel Lucent’s Board Recommendation” below.

 

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Effect of the Exchange Offer on Alcatel Lucent Shares, Alcatel Lucent ADSs, OCEANEs and Share- and Equity-Based Incentive Plans

Consideration for Alcatel Lucent Shares and Alcatel Lucent ADSs

If Alcatel Lucent’s executive officers and directors were to tender any Alcatel Lucent Shares or Alcatel Lucent ADSs they own for exchange pursuant to the Exchange Offer, they would receive the same consideration on the same terms and conditions as the other holders of Alcatel Lucent Shares and Alcatel Lucent ADSs generally.

As of April 13, 2015, the date immediately prior to the public announcement of discussions related to a possible business combination between Alcatel Lucent and Nokia, Alcatel Lucent’s executive officers and directors (and their respective affiliates and affiliated investment entities) as of that date owned 6 785 573 Alcatel Lucent Shares (including Alcatel Lucent Shares represented by Alcatel Lucent ADSs). If Alcatel Lucent’s executive officers and directors (and affiliates and affiliated investment entities) as of April 13, 2015 had validly tendered all of their outstanding Alcatel Lucent Shares and Alcatel Lucent ADSs held as of that date pursuant to the Exchange Offer, Alcatel Lucent’s executive officers and directors (and their respective affiliates and affiliated investment entities) as of that date would have received Nokia Shares having an aggregate value of approximately EUR 28 974 397, based on the closing price of the Nokia Shares as of April 13, 2015 of EUR 7.77.

October 27, 2015, the date before the determination and recommendation by Alcatel Lucent’s board of directors in respect of the Exchange Offer, Alcatel Lucent’s executive officers and directors (and their respective affiliates and affiliated investment entities) as of that date owned 6 815 005 Alcatel Lucent Shares (including Alcatel Lucent Shares represented by Alcatel Lucent ADSs). If Alcatel Lucent’s executive officers and directors (and affiliates and affiliated investment entities) as of October 27, 2015, pursuant to the Exchange Offer, were to validly tender all of their outstanding Alcatel Lucent Shares and Alcatel Lucent ADSs held as of that date, Alcatel Lucent’s executive officers and directors (and their respective affiliates and affiliated investment entities) as of that date would receive Nokia Shares having an aggregate value of approximately EUR 22 285 066 based on the closing price of the Nokia Shares as of October 27, 2015 of EUR 5.95.

Consideration for OCEANEs

No Alcatel Lucent executive officers or directors hold any OCEANEs. However, if Alcatel Lucent’s executive officers and directors were to hold OCEANEs and tender any OCEANEs they own for exchange pursuant to the Exchange Offer, they would receive the same consideration on the same terms and conditions as the other holders of OCEANEs generally.

Distribution of Unrestricted Alcatel Lucent Shares

On October 28, 2015, Alcatel Lucent’s board of directors resolved, on the recommendation of the compensation committee, to grant to Alcatel Lucent employees, in lieu of the Alcatel Lucent Stock Options Plan (as defined below) that Alcatel Lucent’s board of directors had considered granting in respect of the year ended December 31, 2014 and which has not been granted, unrestricted Alcatel Lucent Shares (representing a maximum total number of 3 507 185 as of October 31, 2015) according to a ratio of one Alcatel Lucent Share per two Alcatel Lucent Stock Options, subject to the completion of the Exchange Offer, to the presence condition being fulfilled as of the Expiration Date and to an undertaking to sell the unrestricted Alcatel Lucent Shares on the market no later than two French trading days before the last day of the subsequent offering period. A maximum aggregate amount of 275 000 unrestricted Alcatel Lucent Shares are expected to be granted to Alcatel Lucent’s executive officers. No unrestricted Alcatel Lucent Shares would be granted to directors who are not executive officers.

 

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In certain jurisdictions, the mechanisms described above may be adjusted to comply with possible applicable legal, regulatory or other local constraints.

The foregoing summary of the distribution of Alcatel Lucent Shares does not purport to be complete and is qualified in its entirety by reference to the Form of Replacement Share Grant Notification, a copy of which is included as Exhibit (e)(9) to this Schedule 14D-9 and is incorporated herein by reference.

Acceleration of Alcatel Lucent Stock Options

In connection with its long-term incentive compensation arrangements, Alcatel Lucent grants Alcatel Lucent Stock Options to employees and members of management pursuant to plans in effect from time to time (“Alcatel Lucent Stock Options Plans”). The Alcatel Lucent Stock Option Plans have the following terms:

 

   

the vesting of Alcatel Lucent Stock Options generally occurs:

 

   

for Alcatel Lucent Stock Options Plans for beneficiaries located in France, over three successive periods (an initial 2-year vesting period after which beneficiaries acquire 50% of the entitlement, a second 1-year vesting period after which the beneficiaries acquire an additional 25% of the entitlement, and a third 1-year vesting period after which the beneficiaries acquire the remaining 25% of the entitlement); and

 

   

for Alcatel Lucent Stock Options Plans for beneficiaries located outside of France, over four successive 1-year periods (beneficiaries acquire 25% of the entitlement at the end of each period);

 

   

vesting at the end of each period is subject to:

 

   

presence conditions, which are satisfied if the relevant beneficiary maintains his or her position as an employee at Alcatel Lucent (or one of its subsidiaries) at the expiration date of each relevant period; and

 

   

for executive directors and members of the leadership team only, performance conditions related to free cash flow.

As of October 31, 2015, there were 81 040 440 Alcatel Lucent Stock Options issued, out of which 67 452 250 Alcatel Lucent Stock Options were exercisable and the Alcatel Lucent Shares which may be issued pursuant to their exercise were transferable.

In connection with the Exchange Offer, on April 14, 2015 Alcatel Lucent’s board of directors, on the recommendation of the compensation committee, resolved to offer to accelerate or waive any vesting periods, vesting conditions, performance conditions and presence conditions and lock-up periods for Alcatel Lucent Stock Options granted prior to the date of the Memorandum of Understanding (a maximum amount of approximately 13 588 190 Alcatel Lucent Stock Options as of October 31, 2015), subject to:

 

   

the completion of the Exchange Offer;

 

   

applicable presence conditions being fulfilled on the Expiration Date;

 

   

holders of accelerated Alcatel Lucent Stock Options undertaking to exercise all of their unvested Alcatel Lucent Stock Options as well as all of their vested Alcatel Lucent Stock Options (except, as the case may be, those that are subject to a tax lock-up period provided by French or Belgian law); and

 

 

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holders of accelerated Alcatel Lucent Stock Options authorizing the Alcatel Lucent Stock Options Plan administrator to sell on the market all the resulting Alcatel Lucent Shares on their behalf no later than two French trading days before the last day of the subsequent offering period.

Holders of Alcatel Lucent Stock Options will not be required to exercise any of their Alcatel Lucent Stock Options and to sell the resulting Alcatel Lucent Shares where the sum of the exercise price and the related costs and expenses relating to the exercise and sale of the resulting Alcatel Lucent Shares will exceed the Alcatel Lucent Share price. Instead, by accepting the acceleration of their Alcatel Lucent Stock Options, such holders will be required to irrevocably accept to be bound by an Underwater Stock Options Liquidity Agreement with respect to the Alcatel Lucent Stock Options not exercised pursuant to the preceding sentence, as further described in the section entitled “—Liquidity Agreement Offered to Holders of Underwater Stock Options” below. In addition, holders will be required to irrevocably accept to be bound by a Lock-Up Liquidity Agreement, as further described in the section entitled “—Liquidity Agreements Offered to Holders of Alcatel Lucent Stock Options and Beneficiaries of Performance Shares Granted Before 2015 and Subject to a Lock-Up Period” below, with respect to the Alcatel Lucent Stock Options subject to a tax lock-up period provided by French or Belgian law, unless the holder elects to accelerate such Alcatel Lucent Stock Options.

In respect of holders of Alcatel Lucent Stock Options who elect not to accept the acceleration, the terms and conditions of their Alcatel Lucent Stock Options will remain unchanged, including the presence conditions and, as applicable, performance conditions. Certain holder of Alcatel Lucent Stock Options will be offered the Lock-Up Liquidity Agreement, as further described in the section entitled “—Liquidity Agreements Offered to Holders of Alcatel Lucent Stock Options and Beneficiaries of Performance Shares Granted Before 2015 and Subject to a Lock-Up Period” below.

In certain jurisdictions, the mechanisms described above may be adjusted to comply with possible applicable legal, regulatory or other local constraints.

The foregoing summary of the Alcatel Lucent Stock Options does not purport to be complete and is qualified in its entirety by reference to the Form of Stock Option Acceleration Agreement, a copy of which is included as Exhibit (e)(7) and is incorporated herein by reference, and to the Alcatel Lucent Stock Options Plans, copies of which are included as Exhibits (e)(14) to (e)(21) to this Schedule 14D-9 and are incorporated herein by reference.

As of April 13, 2015, Alcatel Lucent’s executive officers and directors (and their respective affiliates and affiliated investment entities) as of that date owned Alcatel Lucent Stock Options (including unvested Alcatel Lucent Stock Options which may be accelerated as described above) exercisable into approximately 841 777 Alcatel Lucent Shares at a weighted average exercise price of EUR 2.262 per Alcatel Lucent Share. If Alcatel Lucent’s executive officers and directors (and affiliates and affiliated investment entities) as of April 13, 2015, had exercised all Alcatel Lucent Stock Options (including unvested Alcatel Lucent Stock Options which may be accelerated as described above) held as of that date and had validly tendered all of the resulting Alcatel Lucent Shares pursuant to the Exchange Offer, Alcatel Lucent’s executive officers and directors (and their respective affiliates and affiliated investment entities) as of that date would have received Nokia Shares having an aggregate value (net of the exercise price of the Alcatel Lucent Stock Options) of approximately EUR 1 690 288, based on the closing price of the Nokia Shares as of April 13, 2015 of EUR 7.77.

As of October 27, 2015, Alcatel Lucent’s executive officers and directors (and their respective affiliates and affiliated investment entities) as of that date owned Alcatel Lucent Stock Options (including unvested Alcatel Lucent Stock Options which may be accelerated as described above) exercisable into 849 100 Alcatel Lucent Shares at a weighted average exercise price of EUR 2.406 per Share. If Alcatel

 

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Lucent’s executive officers and directors (and affiliates and affiliated investment entities) as of October 27, 2015, were to exercise all Alcatel Lucent Stock Options (including unvested Alcatel Lucent Stock Options which may be accelerated as described above) held as of that date and validly tender all of the resulting Alcatel Lucent Shares pursuant to the Exchange Offer, Alcatel Lucent’s executive officers and directors (and their respective affiliates and affiliated investment entities) as of that date would receive Nokia Shares having an aggregate value (net of the exercise price of the Alcatel Lucent Stock Options) of approximately EUR 733 622, based on the closing price of the Nokia Shares as of October 27, 2015 of EUR 5.95.

Acceleration of Performance Shares

In connection with its long-term incentive compensation arrangements, Alcatel Lucent grants Performance Shares to employees and members of management pursuant to plans in effect from time to time (“Performance Share Plans”). The Performance Share Plans have the following terms:

 

   

Performance Shares entitle the recipient to receive Alcatel Lucent Shares upon vesting;

 

   

the vesting of Performance Shares generally occurs:

 

   

for Performance Share Plans adopted in 2014 and later, over two successive 2-year periods (an initial 2-year vesting period after which beneficiaries acquire 50% of the entitlement and a second 2-year vesting period after which beneficiaries acquire the remaining 50% of the entitlement);

 

   

for Performance Share Plans for beneficiaries located in France adopted prior to 2014, after a 2-year period and with an additional 2-year holding period; and

 

   

for Performance Share Plans for beneficiaries located outside of France adopted prior to 2014, after a 4-year period;

 

   

vesting is subject to the assessment at the end of each relevant period of:

 

   

presence conditions, which are satisfied if the relevant beneficiary maintains his or her position as an employee at Alcatel Lucent (or one of its subsidiaries) at the expiration date of each relevant period; and

 

   

performance conditions.

As of October 31, 2015, there are 28 188 080 unvested Performance Shares and 2 506 385 vested Performance Shares that remain subject to a holding period which is not expected to expire prior to the closing date of the Exchange Offer.

In connection with the Exchange Offer, on April 14, 2015 Alcatel Lucent’s board of directors, on the recommendation of the compensation committee, resolved to allow beneficiaries of Performance Shares granted prior to the date of the Memorandum of Understanding to exchange each of their unvested Performance Shares (a total maximum number of 18 217 530 Alcatel Lucent Performance Shares to Alcatel Lucent’s knowledge as of October 31, 2015) for an unrestricted Alcatel Lucent Share, minus, in the relevant countries, the number of Alcatel Lucent Shares which have to be sold in order to cover payable tax charges, subject to:

 

   

the completion of the Exchange Offer;

 

   

applicable presence conditions being fulfilled on the Expiration Date; and

 

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holders of accelerated Performance Shares authorizing the Performance Share Plan administrator to sell on the market all the resulting Alcatel Lucent Shares on their behalf no later than two French trading days before the last day of the subsequent offering period.

In respect of beneficiaries who elect not to accept the acceleration and except as set forth in the following sentence, the terms and conditions of the Performance Shares, including the performance conditions and the presence conditions, will remain unchanged. Nokia and Alcatel Lucent have agreed that Alcatel Lucent would amend the terms and conditions of any Performance Shares that remain outstanding in order to, in case of Reduced Liquidity (as defined below), use the stock market price of Nokia Shares instead of the stock market price of Alcatel Lucent Shares as the reference stock market price and to adjust the representative reference panel. Certain beneficiaries of Performance Shares will be offered the Lock-Up Liquidity Agreement, as further described in the section entitled “—Liquidity Agreements Offered to Holders of Alcatel Lucent Stock Options and Beneficiaries of Performance Shares Granted Before 2015 and Subject to a Lock-Up Period” below.

In certain jurisdictions, these mechanisms may be adapted to comply with possible applicable statutory, regulatory or other type of constraints.

The foregoing summary of the Performance Shares does not purport to be complete and is qualified in its entirety by reference to the form of Performance Shares Acceleration Agreement, a copy of which is included as Exhibit (e)(8) hereto and is incorporated herein by reference, and the Performance Share Plans, copies of which are included as Exhibits (e)(13) and (e)(22) to (e)(24) to this Schedule 14D-9 and are incorporated herein by reference.

On July 29, 2015, Alcatel Lucent’s board of directors, on the recommendation of the compensation committee, resolved to adopt an additional Performance Share Plan (the “2015 Performance Share Plan”) pursuant to which Alcatel Lucent expects, as of October 31, 2015, to issue a maximum amount of 9 970 550 Performance Shares to Alcatel Lucent employees. The Performance Shares issued pursuant to the 2015 Performance Share Plan will be subject to customary presence and performance conditions over a four-year vesting period, and will not be accelerated in connection with the Exchange Offer. The beneficiaries of Performance Shares issued pursuant to the 2015 Performance Share Plan will be required to enter into a 2015 Performance Share Plan Liquidity Agreement, as further described in the section entitled “—Liquidity Agreement Offered to Beneficiaries of Performance Shares granted pursuant to the 2015 Performance Share Plan” below.

In certain jurisdictions, these mechanisms may be adapted to comply with possible applicable statutory, regulatory or other type of constraints.

The foregoing summary of the Performance Shares to be issued pursuant to the 2015 Performance Share Plan does not purport to be complete and is qualified in its entirety by reference to the 2015 Performance Share Plan, a copy of which is included as Exhibit (e)(10) to this Schedule 14D-9 and is incorporated herein by reference.

As of April 13, 2015, Alcatel Lucent’s executive officers and directors (and their respective affiliates and affiliated investment entities) were beneficiaries of 417 651 Performance Shares (including unvested Performance Shares which may be accelerated as for any employee under the conditions described above. If Alcatel Lucent’s executive officers and directors (and affiliates and affiliated investment entities) as of April 13, 2015, had exchanged all Performance Shares (including unvested Performance Shares which may be accelerated as for any employee under the conditions described above) held as of that date for Alcatel Lucent Shares and had validly tendered all of the resulting Alcatel Lucent Shares pursuant to the Exchange Offer, Alcatel Lucent’s executive officers and directors (and their

 

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respective affiliates and affiliated investment entities) as of that date would have received Nokia Shares having an aggregate value of approximately EUR 1 783 370, based on the closing price of the Nokia Shares as of April 13, 2015 of EUR 7.77.

As of October 27, 2015, Alcatel Lucent’s executive officers and directors (and their respective affiliates and affiliated investment entities) were beneficiaries of 311 975 Performance Shares (including unvested Performance Shares which may be accelerated as for any employee under the conditions described above, but excluding those Performance Shares granted pursuant to the 2015 Performance Share Plan, which will not be accelerated in connection with the Exchange Offer and will remain subject to presence and performance conditions). If Alcatel Lucent’s executive officers and directors (and affiliates and affiliated investment entities) as of October 27, 2015, were to exchange all Performance Shares (including unvested Performance Shares which may be accelerated as for any employee under the conditions described above, but excluding those Performance Shares granted pursuant to the 2015 Performance Share Plan, which will not be accelerated in connection with the Exchange Offer and will remain subject to presence and performance conditions) held as of that date for Shares and validly tender all of the resulting Shares pursuant to the Exchange Offer, Alcatel Lucent’s executive officers and directors (and their respective affiliates and affiliated investment entities) as of that date would receive Nokia Shares having an aggregate value of approximately EUR 1 020 158, based on the closing price of the Nokia Shares as of October 27, 2015 of EUR 5.95.

Acceleration of the Performance Units

In connection with its long-term incentive compensation arrangements, Alcatel Lucent grants performance units (“Performance Units”) exclusively to executive officers and directors. Performance Units are conditional rights which grant the beneficiary the right to receive compensation in cash. Performance Units are subject to the satisfaction of performance and presence conditions at the end of the vesting period. Performance conditions, presence conditions, and vesting periods for Performance Units vary and are set by Alcatel Lucent’s board of directors when the Performance Units are granted.

Performance Units granted to the leadership team (other than Alcatel Lucent’s president and chief executive officer) would be accelerated upon a change of control of Alcatel Lucent, pursuant to a decision of Alcatel Lucent’s board of directors in 2013, as for any employee in connection with his or her Performance Shares as described above. For further information on arrangements with respect to Performance Units granted to Mr. Combes and the reduction in Performance Units agreed between Alcatel Lucent and Mr. Combes, see the section entitled “—Employment Arrangements—Employment Arrangements with Mr. Michel Combes (Former Chief Executive Officer and Former Director)” below. The Performance Units granted to Mr. Philippe Camus, Alcatel Lucent’s chairman and interim chief executive officer, will not be accelerated in connection with the Exchange Offer. Performance Units granted to all beneficiaries are payable in cash upon the date of acceleration.

The foregoing summary of the grant of Performance Units does not purport to be complete.

As of April 13, 2015, Alcatel Lucent’s executive officers and directors (and their respective affiliates and affiliated investment entities) were beneficiaries of 5 890 000 Performance Units (including unvested Performance Units which may be accelerated as described above). If Alcatel Lucent’s executive officers and directors (and affiliates and affiliated investment entities) as of April 13, 2015, had exchanged all Performance Units (including unvested Performance Units which may be accelerated as for any employee under the conditions described above) held as of that date for cash compensation, Alcatel Lucent’s executive officers and directors (and their respective affiliates and affiliated investment entities) as of that date would have received cash compensation having an aggregate value of

 

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approximately EUR 23 836 250, based on the closing price of Alcatel Lucent Shares as of April 13, 2015 of EUR 3.86, except for the Performance Units granted to Mr. Combes, which would have been payable in Alcatel Lucent Shares (or Nokia Shares, following completion of the squeeze-out of Alcatel Lucent Shares, if any) at their respective maturity dates in 2016, 2017 and 2018 (one Alcatel Lucent Share (or 0.5500 Nokia Shares) per Performance Unit) and for which the estimated value is calculated based on the closing price of the Nokia Shares as of April 13, 2015 of EUR 7.77 and the exchange ratio of 0.5500, resulting in an implied value of EUR 4.27 per Performance Unit.

As of October 27, 2015, Alcatel Lucent’s executive officers and directors (and their respective affiliates and affiliated investment entities) were beneficiaries of 3 205 000 Performance Units (including unvested Performance Units which may be accelerated in connection with the Exchange Offer). If Alcatel Lucent’s executive officers and directors (and affiliates and affiliated investment entities) as of October 27, 2015, were to exchange all Performance Units (including unvested Performance Units which may be accelerated under the conditions described above) held as of that date for cash compensation, Alcatel Lucent’s executive officers and directors (and their respective affiliates and affiliated investment entities) as of that date would receive cash compensation having an aggregate value of approximately EUR 10 448 300, based on the closing price of the Alcatel Lucent Shares as of October 27, 2015 of EUR 3.26.

Liquidity Agreements Offered to Holders of Alcatel Lucent Stock Options and Beneficiaries of Performance Shares Granted Before 2015 and Subject to a Lock-Up Period

Pursuant to the Memorandum of Understanding, Nokia will offer liquidity agreements (the “Lock-Up Liquidity Agreements”) to the French tax residents who are beneficiaries of the following plans, as a result of tax constraints to which they are subject:

 

   

Performance Share Plans n°A0914RUROW and n°A0914RPROW dated September 15, 2014, namely, a maximum number of 1 796 429 Alcatel Lucent Shares as of October 31, 2015;

 

   

Alcatel Lucent Stock Options Plan n°A0812NHFR2 dated August 13, 2012, namely, a maximum number of 26 420 Alcatel Lucent Shares as of October 31, 2015;

 

   

Alcatel Lucent Stock Options Plans n°A0312COFR2, n°A0312CPFR2 and n°A0312NHFR2 dated March 14, 2012, namely, a maximum number of 1 474 681 Alcatel Lucent Shares as of October 31, 2015.

The Lock-Up Liquidity Agreements will also be offered to Belgian tax residents who are beneficiaries of the following plan, provided that they opted for the taxation at the grant on a reduced basis of these Alcatel Lucent Stock Options and that they committed to hold these Alcatel Lucent Stock Options:

 

   

Alcatel Lucent Stock Options Plan n°A0713COBE2 dated July 12, 2013, namely, a maximum number of 170 637 Alcatel Lucent Shares as of October 31, 2015.

Pursuant to the Lock-Up Liquidity Agreements, in case of (i) delisting of the Alcatel Lucent Shares, (ii) holding by Nokia of more than 85% of the Alcatel Lucent Shares or (iii) average daily trading volume of Alcatel Lucent Shares on Euronext Paris falling below 5 000 000 Alcatel Lucent Shares for 20 consecutive French trading days (any such event, “Reduced Liquidity”), the Alcatel Lucent Shares received by holders of Alcatel Lucent Stock Options will automatically be exchanged for either Nokia Shares or for cash consideration equal to the market value of such Nokia Shares, upon exercise of these Alcatel Lucent Stock Options after expiration of the applicable lock-up period. The Lock-Up Liquidity Agreement also provides that the relevant Performance Shares would be automatically exchanged by Nokia for either Nokia Shares or for cash consideration equal to the market value of such Nokia Shares, shortly after the end of the applicable lock-up period.

 

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The exchange ratio to be offered pursuant to the Lock-Up Liquidity Agreements would be consistent with the exchange ratio of the Exchange Offer, subject to certain adjustments, in case of certain financial transactions of Nokia or Alcatel Lucent, in order for the holders of Alcatel Lucent Stock Options and beneficiaries of Performance Shares to be able to obtain the same value in either Nokia Shares or cash consideration that they would have obtained if such a transaction had not taken place.

In certain jurisdictions, the mechanism described above may be adjusted to comply with possible applicable legal, regulatory or other local constraints.

The foregoing summary of the Lock-Up Liquidity Agreements does not purport to be complete and is qualified in its entirety by reference to the Forms of Lock-Up Liquidity Agreement, copies of which are included as Exhibits (e)(3) and (e)(4) to this Schedule 14D-9 and are incorporated herein by reference.

Liquidity Agreement Offered to Holders of Underwater Stock Options

Pursuant to the Memorandum of Understanding, Nokia has agreed to offer a liquidity agreement (the “Underwater Stock Options Liquidity Agreement”) to holders of Alcatel Lucent Stock Options with respect to (i) the vested Alcatel Lucent Stock Options not covered by the undertaking to sell described in the section entitled “—Acceleration of Alcatel Lucent Stock Options” above where the sum of the exercise price and the costs and expenses relating to the exercise and sale of the resulting Alcatel Lucent Shares will represent more than 90% of the Alcatel Lucent Share price as of the closing of the last day of the subsequent offering period on Euronext Paris and (ii) the unvested and vested Alcatel Lucent Stock Options to be subject to a liquidity agreement as described in the section entitled “—Acceleration of Alcatel Lucent Stock Options” above. The Underwater Stock Options Liquidity Agreement would provide for Alcatel Lucent Shares received to be automatically exchanged by Nokia for either Nokia Shares or for cash consideration equal to the market value of such Nokia Shares.

The exchange ratio to be offered pursuant to the Underwater Stock Options Liquidity Agreement would be consistent with the exchange ratio of the Exchange Offer, subject to certain adjustments, in case of certain financial transactions of Nokia or Alcatel Lucent, in order for holders of Alcatel Lucent Stock Options to be able to obtain the same value in either Nokia Shares or cash consideration that they would have obtained if such a transaction had not taken place.

In certain jurisdictions, the mechanism described above may be adjusted to comply with possible applicable legal, regulatory or other local constraints.

The foregoing summary of the Underwater Stock Option Liquidity Agreement does not purport to be complete and is qualified in its entirety by reference to the Form of Underwater Stock Option Liquidity Agreement, a copy of which is included as Exhibit (e)(6) to this Schedule 14D-9 and is incorporated herein by reference.

Liquidity Agreement Offered to Beneficiaries of Performance Shares granted pursuant to the 2015 Performance Share Plan

Pursuant to the Memorandum of Understanding, Nokia and Alcatel Lucent have agreed to enter into a liquidity agreement (the “2015 Performance Share Plan Liquidity Agreement”) with all beneficiaries of Performance Shares granted pursuant to the 2015 Performance Share Plan, pursuant to which, in case of Reduced Liquidity at the date of expiration of the applicable vesting period, all Performance Shares granted pursuant to the 2015 Performance Share Plan, representing a maximum amount of 9 970 550 Alcatel Lucent Shares as of October 31, 2015, would be automatically exchanged by Nokia for either Nokia Shares or for cash consideration equal to the market value of such Nokia Shares shortly after the end of the vesting period.

 

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The exchange ratio to be offered pursuant to the 2015 Performance Share Plan Liquidity Agreement would be consistent with the exchange ratio of the Exchange Offer, subject to certain adjustments, in case of certain financial transactions of Nokia or Alcatel Lucent, in order for the beneficiaries of Performance Shares granted pursuant to the 2015 Performance Share Plan to be able to obtain the same value in either Nokia Shares or cash consideration that they would have obtained if such a transaction had not taken place.

In certain jurisdictions, the mechanism described above may be adjusted to comply with possible applicable legal, regulatory or other local constraints.

The foregoing summary of the 2015 Performance Share Plan Liquidity Agreements does not purport to be complete and is qualified in its entirety by reference to the Form of 2015 Performance Share Plan Liquidity Agreement, a copy of which is included as Exhibit (e)(5) to this Schedule 14D-9 and is incorporated herein by reference.

 

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Table of Consideration Related to the Exchange Offer as of Immediately Prior to the Memorandum of Understanding

The following table sets forth as of April 13, 2015 the approximate aggregate amount of consideration that Alcatel Lucent’s executive officers and directors as of that date would have been entitled to receive in connection with the completion of the Exchange Offer, assuming that such executive officers and directors (1) validly tendered all Alcatel Lucent Shares and Alcatel Lucent ADSs held by them pursuant to the Exchange Offer, (2) exercised all Alcatel Lucent Stock Options held by them for Alcatel Lucent Shares and validly tendered such Alcatel Lucent Shares into the Exchange Offer, (3) exchanged all Performance Shares held by them for Alcatel Lucent Shares and validly tendered such Alcatel Lucent Shares into the Exchange Offer and (4) received cash compensation in respect of all Performance Units granted to them. Unless otherwise indicated, estimated values are calculated based on the closing price of the Nokia Shares as of April 13, 2015 of EUR 7.77 and the exchange ratio of 0.5500, resulting in an implied value of EUR 4.27 per Alcatel Lucent Share.

 

Name and Title

   Number of
Alcatel
Lucent
Shares and
Alcatel
Lucent
ADSs(1)
    Estimated
Value Alcatel
Lucent
Shares and
Alcatel
Lucent ADSs
    Number
of Alcatel
Lucent
Stock
Options(2)
    Estimated
Value of
Alcatel
Lucent
Stock
Options(3)
    Number of
Performance
Shares(4)
    Estimated
Value of
Performance
Shares
    Number of
Performance
Units(5)
    Estimated
Value of
Performance
Units(6)
    Estimated
Total Value of
Consideration
 

Philippe Camus (Chairman)

     1 131 352      4 830 873        —          —          —          —          400 000      1 544 000      6 374 873   

Jean C. Monty (Vice Chairman)

     5 030 001      21 478 104        —          —          —          —          —          —        21 478 104   

Michel Combes (CEO and Director)(7)

     —   (8)      —          —          —          —          —          2 685 000      11 464 950      11 464 950   

Francesco Caio (Director)

     2 100      8 967        —          —          —          —          —          —        8 967   

Carla Cico (Director)

     29 359      125 363        —          —          —          —          —          —        125 363   

Stuart E. Eizenstat (Director)

     29 963      127 942        —          —          —          —          —          —        127 942   

Kim Crawford Goodman (Director)

     6 348      27 106        —          —          —          —          —          —        27 106   

Louis R. Hughes (Director)

     33 926      144 864        —          —          —          —          —          —        144 864   

Véronique Morali (Director)

     500      2 135        —          —          —          —          —          —        2 135   

Olivier Piou (Director)

     88 955      379 838        —          —          —          —          —          —        379 838   

Jean-Cyril Spinetta (Director)

     29 791      127 208        —          —          —          —          —          —        127 208   

Total Other Executive Officers(9)

     403 278      1 721 997        841 777      1 690 289        417 651      1 783 370        2 805 000      10 827 300      16 022 956   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     6 785 573      28 974 397        841 777      1 690 288        417 651      1 783 370        5 890 000      23 836 250      56 284 305   

 

(1) Includes certain Alcatel Lucent Shares held by directors that are subject to restrictions and may not be tendered into the Exchange Offer. In particular:

 

  (a) Article 12 of Alcatel Lucent’s By-Laws requires each director to hold at least 500 Alcatel Lucent Shares. As a result, Alcatel Lucent expects that no director will tender the 500 Alcatel Lucent Shares he or she holds in compliance with this requirement.
  (b)

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

 

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  additional attendance 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.
  (c) 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.

 

(2) Includes Alcatel Lucent Stock Options granted prior to the date of the Memorandum of Understanding which Alcatel Lucent’s board of directors has resolved to accelerate.
(3) Calculated using a weighted average exercise price for the Alcatel Lucent Stock Options of EUR 2.262.
(4) Includes Performance Shares granted prior to the date of the Memorandum of Understanding which Alcatel Lucent’s board of directors has resolved to accelerate.
(5) Includes Performance Units granted prior to the date of the Memorandum of Understanding which Alcatel Lucent’s board of directors has resolved to accelerate, but excludes those Performance Units with performance conditions relating to periods prior to the date of the Memorandum of Understanding for which the relevant conditions were not satisfied.
(6) Calculated based on the right to receive cash compensation in cash in respect of each Performance Unit equal to the value of one Alcatel Lucent Share, and based on the closing price of Alcatel Lucent Shares as of April 13, 2015 of EUR 3.86, except for the Performance Units granted to Mr. Combes, which would have been payable in Alcatel Lucent Shares (or Nokia Shares, following completion of the squeeze-out of Alcatel Lucent Shares, if any) at their respective maturity dates in 2016, 2017 and 2018 (one Alcatel Lucent Share (or 0.5500 Nokia Shares) per Performance Unit) and for which the estimated value is calculated based on the closing price of the Nokia Shares as of April 13, 2015 of EUR 7.77 and the exchange ratio of 0.5500, resulting in an implied value of EUR 4.27 per Performance Unit.
(7) Reflects amounts attributable to Mr. Combes as of April 13, 2015, which Alcatel Lucent’s board of directors subsequently resolved, with the agreement of and upon the request of Mr. Combes, to reduce to a payment in cash of EUR 3 251 307 in respect of Performance Units for the years ended December 31, 2013 and 2014 a maximum amount in cash of EUR 1 408 887 in respect of Performance Units for the year ended December 31, 2015, as further described in the section entitled “—Employment Arrangements—Employment Arrangements with Mr. Michel Combes (Former Chief Executive Officer and Former Director)” below.
(8) Excludes 500 Alcatel Lucent Shares held by Mr. Combes that have been lent by Florelec, a subsidiary of Alcatel Lucent, to Mr. Combes for the duration of his term as a director of Alcatel Lucent, in order to satisfy Article 12 of Alcatel Lucent’s By-Laws, which requires each director to hold at least 500 Alcatel Lucent Shares, and which will be returned to Florelec for no consideration at the end of such term.
(9) The other executive officers of Alcatel Lucent as of April 13, 2015, were Mr. Jean Raby, Mr. Philippe Keryer, Ms. Nicole Gionet, Mr. Tim Krause and Mr. Philippe Guillemot who, together with Mr. Combes, comprised the Management Committee of Alcatel Lucent.

Table of Consideration Related to the Exchange Offer as of Immediately Prior to Alcatel Lucent’s Recommendation

Between April 13, 2015 and the date of this Schedule 14D-9, Ms. Sylvia Summers was appointed a director by the meeting of Alcatel Lucent’s shareholders on May 26, 2015, Ms. Véronique Morali’s term as a director ended on July 15, 2015, Mr. Michel Combes resigned as a director and chief executive officer effective as of September 1, 2015, and Mr. Philippe Camus was appointed interim chief executive officer effective as of September 1, 2015.

 

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The following table sets forth as of October 27, 2015, the approximate aggregate amount of consideration that Alcatel Lucent’s executive officers and directors as of that date would be entitled to receive in connection with the completion of the Exchange Offer, assuming that such executive officers and directors (1) validly tender all Shares and ADSs held by them pursuant to the Exchange Offer, (2) exercise all Stock Alcatel Lucent Stock Options held by them for Alcatel Lucent Shares and validly tender such Alcatel Lucent Shares into the Exchange Offer, (3) exchange all Performance Shares held by them (other than Performance Shares granted pursuant to the 2015 Performance Share Plan, which will not be accelerated in connection with the Exchange Offer and will remain subject to presence and performance conditions) for Alcatel Lucent Shares and validly tender such Alcatel Lucent Shares into the Exchange Offer and (4) receive cash compensation in respect of all Performance Units granted to them. Unless otherwise indicated, estimated values are calculated based on the closing price of the Nokia Shares as of October 27, 2015 of EUR 5.95 and the exchange ratio of 0.5500, resulting in an implied value of EUR 3.27 per Share.

 

Name and Title

   Number of
Alcatel
Lucent
Shares and
Alcatel
Lucent
ADSs(1)
    Estimated
Value Alcatel
Lucent
Shares and
Alcatel
Lucent ADSs
    Number
of Alcatel
Lucent
Stock
Options(2)
    Estimated
Value of
Alcatel
Lucent
Stock
Options(3)
    Number of
Performance
Shares(4)
    Estimated
Value of
Performance
Shares
    Number of
Performance
Units(5)
    Estimated
Value of
Performance
Units(6)
    Estimated
Total Value of
Consideration
 

Philippe Camus (Chairman & Interim CEO)

     1 131 352      3 699 521        —          —          —          —          400 000      1 304 000      5 003 521   

Jean C. Monty (Vice Chairman)

     5 033 706      16 460 219        —          —          —          —          —          —        16 460 219   

Francesco Caio (Director)

     5 803      18 976        —          —          —          —          —          —        18 976   

Carla Cico (Director)

     33 062      108 113        —          —          —          —          —          —        108 113   

Stuart E. Eizenstat (Director)

     33 668      110 094        —          —          —          —          —          —        110 094   

Kim Crawford Goodman (Director)

     10 053      32 873        —          —          —          —          —          —        32 873   

Louis R. Hughes (Director)

     37 631      123 053        —          —          —          —          —          —        123 053   

Olivier Piou (Director)

     92 658      302 992        —          —          —          —          —          —        302 992   

Jean-Cyril Spinetta (Director)

     33 494      109 525        —          —          —          —          —          —        109 525   

Sylvia Summers (Director)

     500      1 635        —          —          —          —          —          —        1 635   

Total Other Executive Officers(7)

     403 078      1 318 065        849 100      733 622        311 975      1 020 158        2 805 000      9 144 300      12 216 146   

Total

     6 815 005      22 285 066        849 100      733 622        311 975      1 020 158        3 205 000      10 448 300      34 487 147   

 

(1) Includes certain Alcatel Lucent Shares held by directors that are subject to restrictions and may not be tendered into the Exchange Offer. In particular:

 

  (a) Article 12 of Alcatel Lucent’s By-Laws requires each director to hold at least 500 Alcatel Lucent Shares. As a result, Alcatel Lucent expects that no director will tender the 500 Alcatel Lucent Shares he or she holds in compliance with this requirement.
  (b) 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.

 

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  (c) 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.

 

(2) Includes Alcatel Lucent Stock Options granted prior to the date of the Memorandum of Understanding which Alcatel Lucent’s board of directors has resolved to accelerate.
(3) Calculated using a weighted average exercise price for the Alcatel Lucent Stock Options of EUR 2.406.
(4) Includes Performance Shares granted prior to the date of the Memorandum of Understanding which Alcatel Lucent’s board of directors has resolved to accelerate, but excludes those Performance Shares granted pursuant to the 2015 Performance Share Plan, which will not be accelerated in connection with the Exchange Offer and will remain subject to presence and performance conditions.
(5) Includes Performance Units granted prior to the date of the Memorandum of Understanding which Alcatel Lucent’s board of directors has resolved to accelerate, but excludes those Performance Units with performance conditions relating to periods prior to the date of the Memorandum of Understanding for which the relevant conditions were not satisfied.
(6) Calculated based on the right to receive compensation in cash in respect of each Performance Unit equal to the value of one Alcatel Lucent Share and based on the closing price of Alcatel Lucent Shares on October 27, 2015 of EUR 3.26.
(7) The other executive officers of Alcatel Lucent as of the date of this Schedule 14D-9 are Mr. Jean Raby, Mr. Philippe Keryer, Ms. Nicole Gionet, Mr. Tim Krause and Mr. Philippe Guillemot who, together with Mr. Camus, comprised the Management Committee of Alcatel Lucent.

Employment Arrangements

Alcatel Lucent is managed by its board of directors, which consists of ten members as of the date of this Schedule 14D-9. The functions of the chairman of Alcatel Lucent’s board of directors have been performed by Mr. Philippe Camus since October 1, 2008. As of April 13, 2015, Alcatel Lucent’s other directors were Mr. Jean C. Monty (Vice-Chairman), Mr. Francesco Caio, Ms. Carla Cico, Mr. Michel Combes, Ms. Kim Crawford-Goodman, Mr. Stuart E. Eizenstat, Mr. Louis R. Hughes, Ms. Véronique Morali, Mr. Olivier Piou and Mr. Jean-Cyril Spinetta. Ms. Sylvia Summers was appointed a director by the meeting of Alcatel Lucent’s shareholders on May 26, 2015. Ms. Morali’s term as a director ended on July 15, 2015. Mr. Combes resigned as a director effective as of September 1, 2015.

The functions of the chief executive officer were performed by Mr. Michel Combes from April 1, 2013 to September 1, 2015, and by Mr. Philippe Camus as interim chief executive officer since September 1, 2015. As of April 13, 2015, Alcatel Lucent’s executive officers were the six members of Alcatel Lucent’s ‘Management Committee’, comprising Mr. Combes (CEO and Sales), Ms. Nicole Gionet (Human Resources), Mr. Tim Krause (Marketing), Mr. Jean Raby (Finance and Legal), Mr. Philippe Guillemot (Operations) and Mr. Philippe Keryer (Strategy & Innovation). Mr. Camus replaced Mr. Combes as a member of the Management Committee effective as of September 1, 2015. Alcatel Lucent’s executive officers are primarily responsible for the strategy and organization of Alcatel Lucent, policies to be implemented, long-term financial planning and the human resources strategy. Alcatel Lucent’s executive officers are also responsible for supervising the implementation of Alcatel Lucent’s plans and projects, monitoring the performance of each segment of activity and allocating the resources between these different segments.

Set out below is a summary of employment arrangements and potential benefits upon termination of employment for Alcatel Lucent’s executive directors as of April 13, 2015, Mr. Philippe Camus and Mr. Michel Combes, Alcatel Lucent’s other directors and Alcatel Lucent’s other executive officers.

 

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Other than as described below and as described in the section entitled “—Indemnification of Alcatel Lucent’s Executive Officers and Directors” below, there are no commitments towards directors and executive officers that constitute compensation, allowances or benefits due or likely to be due as a result of the termination of employment.

Employment Arrangements with Mr. Philippe Camus (Interim Chief Executive Officer and Chairman of the Board)

The following table sets forth the compensation granted to Mr. Philippe Camus for the years ended December 31, 2013 and 2014.

 

     Year ended December 31,  
             2014                      2013          
     (EUR)  

Fixed compensation

     200 000         200 000   

Grant of Performance Units(1)

     1 157 600         —     
  

 

 

    

 

 

 

Total

     1 357 600         200 000   

 

(1) Mr. Camus was granted 400 000 Performance Units in the year ended December 31, 2014. The grant was valued at EUR 1 157 600, calculated based on the Alcatel Lucent Share price on March 19, 2014, the date on which it was granted by Alcatel Lucent’s board of directors. It does not reflect the level of achievement (partial or total) of the performance conditions attached to the Performance Units and assessed over 2 years. The gains actually realized will depend on the value of each Performance Unit, calculated based on the average Alcatel Lucent Share price over the 20 trading days preceding March 19, 2016.

The Performance Units granted to Mr. Philippe Camus will not be accelerated in connection with the Exchange Offer.

Mr. Philippe Camus was appointed interim chief executive officer effective as of September 1, 2015. Alcatel Lucent has not entered into an employment agreement with Mr. Camus. In 2014, Alcatel Lucent’s board of directors determined the compensation policy for the executive directors, including Mr. Camus. The compensation of Mr. Camus consists of a fixed annual compensation and long-term compensation in the form of Performance Units, which were subject to presence and performance conditions when granted. In the year ended December 31, 2014, Mr. Camus received a grant of Performance Units vesting over 2 years and subject to performance conditions to be assessed in 2016. This grant is not considered annual long term compensation. Mr. Camus has not been granted any other Performance Units. The Performance Units granted to Mr. Philippe Camus will not be accelerated in connection with the Exchange Offer.

Mr. Camus did not receive any variable compensation, benefits in kind, Alcatel Lucent Stock Options or Performance Shares in the years ended December 31, 2014 and 2013. Mr. Camus is not entitled to any supplemental pension scheme.

Alcatel Lucent has not made any commitment to Mr. Camus with respect to compensation, indemnities or benefits owed or likely to be owed, by reason of the termination or change of his position or following such termination or change of position.

 

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Employment Arrangements with Mr. Michel Combes (Former Chief Executive Officer and Former Director)

The following table sets forth the compensation granted to Mr. Michel Combes for the years ended December 31, 2013 and 2014.

 

     Year ended 31 December  
     2014      2013  
     (EUR)  

Fixed compensation

     1 200 000         900 000   

Variable compensation(1)

     804 000         616 500   

Grant of Performance Units(2)

     2 025 800         1 367 600   
  

 

 

    

 

 

 

Total

     4 029 800         2 884 100   

 

(1) Variable compensation is paid in the following year, after the publication of the annual results on the basis of which the achievement level of the annual performance targets is determined.
(2) Mr. Combes was granted 1 300 000 Performance Units in the year ended December 31, 2013. The grant was valued at EUR 1 367 600, calculated on the basis of the Alcatel Lucent Share price on April 2, 2013, the date on which he took office as CEO.

Mr. Combes was granted 700 000 Performance Units in the year ended December 31, 2014. The grant was valued at EUR 2 025 800, calculated on the basis of the Alcatel Lucent Share price on March 19, 2014, the date on which it was granted by Alcatel Lucent’s board of directors.

On September 10, 2015, Alcatel Lucent’s board of directors resolved to replace all Performance Units granted to Mr. Combes with payments in cash, subject to the completion of the Exchange Offer.

Mr. Combes resigned as chief executive officer effective as of September 1, 2015, and Alcatel Lucent’s board of directors subsequently resolved, with the agreement of and upon the request of Mr. Combes, certain reductions in compensation to Mr. Combes, as further described below. Alcatel Lucent had not entered into an employment agreement with Mr. Michel Combes. In 2014, Alcatel Lucent’s board of directors determined the compensation policy for the executive directors, including Mr. Combes. The compensation of Mr. Combes was determined each year by Alcatel Lucent’s board of directors following recommendation of the compensation committee. The total annual compensation of Mr. Combes consisted of a fixed portion and a variable portion, plus long-term compensation and benefits. The variable compensation was determined each year by Alcatel Lucent’s board of directors according to pre-defined performance criteria. Mr. Combes did not receive any benefits in kind (except for the use of a car), Alcatel Lucent Stock Options or Performance Shares in the years ended December 31, 2013 and 2014.

Mr. Combes also participated in the private pension plan applicable to all corporate executives of Alcatel Lucent’s French subsidiaries (AUXAD plan) for the portion of compensation that exceeded eight times the annual French social security limit beyond which there is no legal or contractual pension scheme, subject to performance conditions pursuant to applicable law.

Mr. Combes had a termination benefit pursuant to a Change of Control Letter (as defined below) equal to one year of compensation (fixed and target variable remuneration), subject to performance conditions as required by applicable regulation. This termination benefit was subject to a performance condition, which requires that Alcatel Lucent’s free cash flow has been positive for at least one fiscal year prior to the end of Mr. Combes’ position as chief executive officer, as reported by Alcatel Lucent in its audited consolidated financial statements.

 

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In compliance with the French AFEP-MEDEF Code of Corporate Governance for Listed Companies, Mr. Combes’ termination benefit would only be paid if the following conditions are met: (a) Alcatel Lucent’s board of directors terminates Mr. Combes’ as CEO in the context of a change of control or strategy and (b) the performance condition as described above is met. This termination benefit will not be payable as a result of the resignation of Mr. Combes as a director and chief executive officer, which was effective as of September 1, 2015.

In connection with the Exchange Offer, on April 14, 2015, Alcatel Lucent’s board of directors, on the recommendation of the compensation committee, resolved to accelerate the Performance Units granted to Mr. Combes, to waive the presence and performance conditions and to adjust the payment conditions, though Alcatel Lucent’s board of directors subsequently resolved, with the agreement of and upon the request of Mr. Combes, to reduce the amount of compensation payable to Mr. Combes in connection with Performance Units, as further described in the next paragraph. Under the original terms, the Performance Units granted to Mr. Combes would have been payable in Alcatel Lucent Shares (or Nokia Shares after the squeeze-out of Alcatel Lucent Shares, if any) at their respective maturities in 2016, 2017 and 2018 (one Alcatel Lucent Share per Performance Unit).

On September 10, 2015, Alcatel Lucent’s board of directors resolved, with the agreement of and upon the request of Mr. Combes, to replace all Performance Units described above granted to Mr. Combes with payments in cash in a maximum aggregate amount of EUR 4 660 194. The 1 025 649 Performance Units to which Mr. Combes was entitled for the years ended December 31, 2013 and 2014 were replaced with a payment in cash of EUR 3 251 307, which was calculated based on the average price of Alcatel Lucent Shares in the 20 trading days prior to August 31, 2015 of EUR 3.17 and the ratio of one Alcatel Lucent Share per Performance Unit. The 666 666 Performance Units granted to Mr. Combes in respect of the year ended December 31, 2015 were reduced to 444 444 Performance Units to reflect the actual presence of Mr. Combes at Alcatel Lucent during the year ended December 31, 2015, and may be reduced further based on the actual level of achievement of the performance criteria for the year ended December 31, 2015 applicable to Performance Units. The maximum amount of this payment in cash to Mr. Combes in respect of the year ended December 31, 2015 is EUR 1 408 887, which was calculated based on the average price of Alcatel Lucent Shares in the 20 trading days prior to August 31, 2015 of EUR 3.17 and the ratio of one Alcatel Lucent Share per Performance Unit. The payments are subject to the completion of the Exchange Offer. Each amount will be reduced by an amount corresponding to the wage part of the social charges owed on the date of payment by Alcatel Lucent to Mr. Combes.

In connection with the Exchange Offer, Mr. Combes was entitled to be granted 350 000 Alcatel Lucent Shares in lieu of the 700 000 Alcatel Lucent Stock Options Alcatel Lucent’s board of directors had considered granting him in respect of the year ended December 31, 2014, as further described in the section entitled “—Distribution of Unrestricted Alcatel Shares” above, though Alcatel Lucent’s board of directors subsequently resolved, with the agreement of and upon the request of Mr. Combes, to reduce the amount of compensation payable to Mr. Combes in connection with Alcatel Lucent Shares, as further described in the next paragraph.

On September 10, 2015, Alcatel Lucent’s board of directors resolved, with the agreement of and upon the request of Mr. Combes, to replace the 350 000 Alcatel Lucent Shares described above to which Mr. Combes was entitled with a payment in cash in a maximum amount of EUR 184 915. The 350 000 Alcatel Lucent Shares to which Mr. Combes was entitled were reduced to 58 333 Alcatel Lucent Shares to reflect the actual presence of Mr. Combes at Alcatel Lucent during the year ended December 31, 2015 and the vesting schedule for the Alcatel Lucent Stock Options, and may be reduced further based on the actual level of achievement of the performance criteria for the year ended December 31, 2015 applicable to Alcatel Lucent Stock Options. The maximum amount of this payment was calculated based on the average price of Alcatel Lucent Shares in the 20 trading days prior to

 

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August 31, 2015 of EUR 3.17 and the payment is subject to the completion of the Exchange Offer. This amount will be reduced by an amount corresponding to the wage part of the social charges owed on the date of payment by Alcatel Lucent to Mr. Combes.

Prior to Mr. Combes’ resigning as chief executive officer of Alcatel Lucent, Alcatel Lucent’s board of directors requested that Alcatel Lucent enter into a non-compete agreement with Mr. Combes, effective upon the date of his resignation. The request for Mr. Combes to enter into a non-compete agreement was made upon the recommendation of the compensation committee and the corporate governance and nominations committee, in light of Mr. Combes’ level of expertise in the telecommunications sector and the experience he had acquired within Alcatel Lucent, and in order to protect Alcatel Lucent’s interests. The non-compete agreement also contained a non-solicitation obligation. Mr. Combes entered into the non-compete agreement with Alcatel Lucent on July 31, 2015.

In consideration of his agreement not to compete directly or indirectly with Alcatel Lucent for a period of three years, Mr. Combes would have received a payment in three installments over three years, in an aggregate amount of either 1 467 900 Alcatel Lucent Shares (in the event the Exchange Offer is not completed) or 807 345 Nokia Shares (in the event the Exchange Offer is completed), though Alcatel Lucent’s board of directors subsequently resolved, with the agreement of and upon the request of Mr. Combes, to reduce the amount of compensation payable to Mr. Combes in connection with the non-compete agreement, as further described in the next paragraph. Under the original terms, in the event that any payment in Alcatel Lucent Shares or Nokia Shares were legally or contractually prohibited, Mr. Combes would have received payments in cash corresponding to the value of the Alcatel Lucent Shares or Nokia Shares, as applicable, as of the relevant payment dates.

On September 10, 2015, Alcatel Lucent’s board of directors resolved, with the agreement of and upon the request of Mr. Combes, to replace the non-compete payment in Alcatel Lucent Shares or Nokia Shares described above with a non-compete payment in cash. The non-compete payment will remain payable in three installments over three years, in an aggregate amount of EUR 3 100 000. The obligation of Mr. Combes not to compete directly or indirectly with Alcatel Lucent was also extended to a period of forty months, and will now expire on December 31, 2018. This amount will be reduced by an amount corresponding to the wage part of the social charges owed on the date of payment by Alcatel Lucent to Mr. Combes.

The non-compete agreement was approved by Alcatel Lucent’s board of directors on October 28, 2015, and will be subject to approval by shareholders at the next general meeting of Alcatel Lucent pursuant to Articles L. 225-38 et seq. of the French commercial Code.

 

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Employment Arrangements with Other Directors

The following table sets forth the compensation received by each director (other than Mr. Philippe Camus and Mr. Michel Combes) during the years ended December 31, 2014 and 2013.

 

     Year ended December 31,  
     2014      2013  
     Total Gross      Amount
received as
member of a
committee
     Amount
received as
chairman of a
committee
     Total
Gross
 
     (EUR)  

Directors

           

Daniel Bernard

     44 238         7 500         7 500         121 044   

Francesco Caio

     52 789         5 000         —           N/A   

Carla Cico

     86 373         10 000         —           87 254   

Stuart E. Eizenstat

     110 426         20 000         —           112 746   

Kim Crawford Goodman

     97 905         17 500         —           87 722   

Louis R. Hughes

     125 426         20 000         15 000         117 638   

Sylvia Jay

     44 576         10 000         —           110 575   

Jean C. Monty

     109 042         5 000         25 000         110 935   

Véronique Morali

     52 789         5 000         —           N/A   

Olivier Piou

     131 810         30 000         —           120 575   

Jean-Cyril Spinetta

     134 626         15 000         22 500         121 511   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

     990 000         145 000         70 000         990 000   

Each director listed above receives a fixed amount of annual compensation, in each case calculated as a portion of an annual amount determined by the Alcatel Lucent shareholders meeting. Each director listed above also receives a variable amount determined in accordance with their attendance at board meetings and at any meetings of the committees of which he or she is a member. Directors may also receive an additional variable amount tied to a commitment to acquire and retain Alcatel Lucent Shares. None of the directors listed above have been granted any Alcatel Lucent Stock Options, Performance Shares or Performance Units in the years ended December 31, 2014 or 2013. Ms. Sylvia Summers was appointed a director by the meeting of Alcatel Lucent’s shareholders on May 26, 2015, and is expected to receive customary compensation in respect of the year ended December 31, 2015.

Alcatel Lucent has not made any commitment to any of the directors listed above with respect to compensation, indemnities or benefits owed or likely to be owed, by reason of the termination or change of his or her position or following such termination or change of position.

In connection with the Exchange Offer and pursuant to the terms of the Memorandum of Understanding, Alcatel Lucent and the Corporate Governance & Nomination committee of Nokia’s board of directors have nominated Mr. Louis R. Hughes, Mr. Jean C. Monty and Mr. Olivier Piou to Nokia’s board of directors, and Mr. Piou as Vice-Chairman of Nokia’s board of directors, in each case subject to the approval of Nokia’s shareholders.

 

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Employment Arrangements with Other Executive Officers

The following table sets forth the compensation received by the executive officers of Alcatel Lucent (other than Mr. Michel Combes) on an aggregate basis during the years ended December 31, 2014 and 2013.

 

     Year ended December 31,  
            2014(1)                   2013(2)        
     (EUR thousands)  

Short-Term Benefits

     

Fixed remuneration

     2 953         4 423   

Variable remuneration(3)

     1 896         1 658   

Directors’ fees

     900         900   

Employer’s social security contributions

     727         3 436   

Termination benefits and retirement indemnities

     —           3 137   

Other Benefits

     

Post-employment benefits

     944         (1 619 )(4) 

Share-based payments

     3 180         5 702   
  

 

 

    

 

 

 

Total

     10 600         17 638   

 

(1) In the year ended December 31, 2014, the executive officers of Alcatel Lucent (other than Mr. Michel Combes) comprised Mr. Jean Raby, Mr. Philippe Keryer, Mr. Tim Krause (from January 1), Mr. Philippe Guillemot and Ms. Nicole Gionet.
(2) In the year ended December 31, 2013, the executive officers of Alcatel Lucent (other than Mr. Michel Combes) comprised Mr. Ben Verwaayen (until March 31), Mr. Jean Raby (from September 1), Mr. Philippe Keryer, Mr. Philippe Guillemot (from July 1), Ms. Nicole Gionet (from July 1), Mr. Stephen Carter (until June 30), Mr. Jeong Kim (until May 31), Mr. Paul Tufano (until October 31), Mr. Robert Vrij (until November 3) and Mr. George Nazi (until June 30). The 2013 French exceptional additional income tax on personal income above EUR 1 million has been reported as an operating expense in the 2013 income statement (above figures do not include the potential impact of such exceptional tax).
(3) Including retention bonuses.
(4) The positive effect is mainly due to gain related to the amendment of AUXAD, which is a French supplemental pension plan for the portion of income that exceeds eight times the annual French social security pension limit, beyond which there is no legal or contractual pension scheme. Starting January 1, 2013, the plan was amended to be fully aligned with the conditions of the French AGIRC scheme (General Association of Pension Institutions for Managerial Staff).

In the ordinary course of business and unrelated to the Exchange Offer, Alcatel Lucent and its subsidiaries entered into employment agreements with Ms. Nicole Gionet, Mr. Tim Krause, Mr. Jean Raby, Mr. Philippe Guillemot and Mr. Philippe Keryer, who, together with Mr. Philippe Camus, comprise the executive officers of Alcatel Lucent as of the date of this Schedule 14D-9.

The compensation of Alcatel Lucent’s executive officers consists of a fixed portion, a variable portion and long-term compensation and benefits based on Alcatel Lucent performance criteria reviewed by the compensation committee of Alcatel Lucent’s board of directors, similar to those applicable to a large number of managers of Alcatel Lucent, and on their individual performance. The fixed portion of compensation for executive officers may also include, where applicable, benefits in kind and expatriation or repatriation allowances as well as housing allowances for expatriates. The variable portion for each fiscal year, payable the following year, is defined by the ‘Achievement Bonus Plan’, the variable compensation plan of Alcatel Lucent approved by the compensation committee of Alcatel Lucent’s board of directors. In addition, directors’ fees, if any, received by executive officers for their participation in meetings of the board of directors of Alcatel Lucent’s subsidiaries are deducted from the salaries paid.

 

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Alcatel Lucent entered into a change of control letter (each, a “2013 Change of Control Letter”) with Mrs. Gionet, Mr. Raby, Mr. Guillemot and Mr. Keryer on December 23, 2013 and with Mr. Krause on April 8, 2015, as well as a letter with Mr. Keryer on March 29, 2006 (the “2006 Change of Control Letter” and, together with the 2013 Change of Control Letters, the “Change of Control Letters”). Pursuant to the terms of the 2013 Change of Control Letters, each other executive officer is entitled to receive a minimum payment in cash of one and one half times the executive officer’s total base salary plus target bonus in the event the executive officer is terminated without cause or there is any material reduction of the executive officer’s duties within twelve months following the occurrence of a change of control. Pursuant to the terms of the 2006 Change of Control Letter, Mr. Keryer will be entitled to an indemnity in connection with his termination of an amount up to two times the total gross amount of his annual compensation. Pursuant to the terms of the Change of Control Letters, the aggregate amounts payable to the executive officers are approximately EUR 10 109 000.

For further information on the amount of consideration that Alcatel Lucent’s other executive officers may receive in connection with the Exchange Offer, including Alcatel Lucent Stock Options and Performance Shares which have been accelerated in connection with the Exchange Offer, see the sections entitled “—Table of Consideration Related to the Exchange Offer as of Immediately Prior to the Memorandum of Understanding” and “—Table of Consideration Related to the Exchange Offer as of Immediately Prior to Alcatel Lucent’s Recommendation” above, which are incorporated herein by reference.

The foregoing summary of the Change of Control Letters does not purport to be complete and is qualified in its entirety by reference to the Form of 2013 Change of Control Letter, a copy of which is included as Exhibit (e)(11) to this Schedule 14D-9 and is incorporated herein by reference, and the Form of 2006 Change of Control Letter, a copy of which is included as Exhibit (e)(12) to this Schedule 14D-9.

Indemnification of Alcatel Lucent’s Executive Officers and Directors

Indemnification under French law

French law generally limits the ability of a French company to indemnify its (i) directors, as well as (ii) its chief executive officer (Directeur Général) and (iii) its deputy chief executive officers (Directeurs Généraux Délégués) ((ii) and (iii) collectively or individually referred to herein as the “Officer(s)”), against their liabilities. Alcatel Lucent does not have any deputy chief executive officers.

However, if a director or an Officer is sued by a third party and ultimately prevails in the litigation on all counts, but is nevertheless required to bear attorneys’ fees and costs, Alcatel Lucent may in specified circumstances reimburse those fees and costs pursuant to an indemnification arrangement with the director or the Officer, to the extent permitted under applicable law.

Alcatel Lucent indemnifies its directors and certain of its current and former executive officers for third-party claims alleging certain breaches of their fiduciary duties as directors or executive officers. Certain costs incurred for providing such indemnification may be recovered under various insurance policies.

The French Commercial Code does not prohibit a company from purchasing directors and officers insurance for all or part of the members of its management. Under French law, a company is, in principle, responsible to third parties for the consequences of the decisions of its directors or Officers, such as violations of the laws and regulations applicable to French commercial companies, breaches of a company’s articles of association or mismanagement. If those decisions qualify as mismanagement for instance, the relevant director or Officer may be required to fully or partly indemnify the company. In addition, under French law, the directors and Officers are liable individually or jointly, as the case may be, to the company or to third parties to the same extent.

 

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Indemnification and Insurance pursuant to the Memorandum of Understanding

Subject to the completion of the Exchange Offer and for six years following the completion of the Exchange Offer, Nokia agreed to cause Alcatel Lucent or its subsidiaries to indemnify and provide advancement of expenses to all past and present directors and senior officers of Alcatel Lucent on terms not less favorable to such director or senior officer than those provided to him or her by Alcatel Lucent or its subsidiaries on the date of the Memorandum of Understanding. The preceding indemnity provision will be deemed satisfied if Alcatel Lucent or Nokia purchase a six-year “tail” prepaid policy on the relevant terms.

Nominees to Nokia’s Board of Directors

In accordance with the Memorandum of Understanding, the Corporate Governance & Nomination committee of the Nokia board of directors and Alcatel Lucent have jointly identified Mr. Louis R. Hughes, Mr. Jean C. Monty and Mr. Olivier Piou as nominees to the Nokia board of directors.

Nokia has convened an extraordinary general meeting of Nokia shareholders to consider and vote on, among other things, the election of three nominees to Nokia’s board of directors, jointly identified by the Corporate Governance & Nomination committee of Nokia’s board of directors and by Alcatel Lucent. The extraordinary general meeting is currently scheduled for December 2, 2015. Proxy materials related to the extraordinary general meeting have been separately distributed by Nokia. The election of the nominees to Nokia’s board of directors would be subject to a successful completion of the Exchange Offer. The election of the nominees to Nokia’s board of directors at the extraordinary general meeting must be approved by shareholders representing at least a majority of the votes cast at the extraordinary general meeting. There is no assurance that any of the three nominees will be elected as directors of Nokia at the Nokia shareholders meeting.

Pursuant to the terms of the Memorandum of Understanding, in the event that such individuals are not elected as directors of Nokia at the Nokia shareholders meeting, the same provisions shall apply to the next annual general meeting of Nokia.

The terms of the Memorandum of Understanding also provide that the Corporate Governance & Nomination committee of Nokia’s board of directors shall nominate one of these three nominees as a vice chairman of Nokia’s board of directors for shareholder consideration at such Nokia shareholders meeting. The Corporate Governance & Nomination committee of Nokia’s board of directors has nominated Mr. Olivier Piou for vice chairman of Nokia’s board of directors.

Employee Matters following Closing

For further information on Nokia’s intentions with respect to management of Nokia and Alcatel Lucent, see the section entitled “The Transaction—Intentions of Nokia over the Next Twelve Months—Management of Nokia and Alcatel Lucent” in the exchange offer/prospectus, which is incorporated herein by reference.

For further information on Nokia’s commitments in relation to employment following the completion of the Exchange Offer, see the section entitled “The Transaction—Intentions of Nokia over the Next Twelve Months—Intentions of Nokia with respect to employment in France” in the exchange offer/prospectus, which is incorporated herein by reference.

Rule 14d-10(d) Matters

The compensation committee of Alcatel Lucent’s board of directors has approved, in accordance with the non-exclusive safe harbor provisions contained in Rule 14d-10 under the Exchange Act, among

 

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other things, each agreement, arrangement or understanding entered into by Alcatel Lucent or its subsidiaries with any of its executive officers, directors or employees pursuant to which consideration is paid to such executive officer, director or employee, as an “employment compensation, severance or other employee benefit arrangement” within the meaning of Rule 14d-10(d) under the Exchange Act. Each member of the compensation committee of Alcatel Lucent is an “independent director” as determined by the AFEP-MEDEF Code of Corporate Governance for Listed Companies in France (code de gouvernement d’entreprise des sociétés cotées), in accordance with the requirements of Rule 14d-10(d)(2) under the Exchange Act and the instructions thereto. Each member of the compensation committee of Alcatel Lucent, other than Olivier Piou, is also an “independent director” as determined under Rule 303A.02 of the NYSE Listed Company Manual.

Item 4. The Solicitation or Recommendation.

Recommendation of Alcatel Lucent’s Board of Directors

At a meeting held on April 14, 2015, Alcatel Lucent’s board of directors unanimously approved the terms of and entry into the Memorandum of Understanding. The press release dated April 15, 2015, announcing the Exchange Offer and the approval of the Memorandum of Understanding by Alcatel Lucent’s board of directors is included as Exhibit (a)(7) hereto and is incorporated herein by reference.

At a meeting held on October 28, 2015, Alcatel Lucent’s board of directors, taking into account the factors described in the section entitled “—Reasons for Alcatel Lucent’s Board Recommendation” below, issued a favorable opinion on the public exchange offer, it being specified that, in light of their proposed nomination to Nokia’s board of directors, 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. The participating members of Alcatel Lucent’s board of directors unanimously:

 

  (i) determined that the Exchange Offer was 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);

 

  (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.

ACCORDINGLY, THE PARTICIPATING MEMBERS OF ALCATEL LUCENT’S BOARD OF DIRECTORS, TAKING INTO ACCOUNT THE FACTORS DESCRIBED IN THE SECTION ENTITLED “—REASONS FOR ALCATEL LUCENT’S BOARD RECOMMENDATION” BELOW, UNANIMOUSLY RECOMMEND THAT HOLDERS TENDER THEIR ALCATEL SHARES, ALCATEL LUCENT ADSS AND, 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 is 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” in the exchange offer/prospectus, which is incorporated herein by reference, the prospectus applicable to each series of OCEANEs and the Independent Expert Report attached as Annex C to this Schedule 14D-9 and is incorporated herein by reference.

Alcatel Lucent’s board of directors also notes that Associés en Finance, which has been appointed by Alcatel Lucent as independent expert in accordance with Article 261-1 et seq. of the AMF General Regulation (the “Independent Expert”), delivered their written report, dated October 28, 2015, on the financial terms of the Exchange Offer (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 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.

Alcatel Lucent’s board of directors reminds holders of Alcatel Lucent Securities that 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, is attached as Annex C to this Schedule 14D-9 and is incorporated herein by reference, and urges holders of Alcatel Lucent Securities to carefully read the Independent Expert Report in its entirety.

The press release dated October 29, 2015, announcing the determination and recommendation of Alcatel Lucent’s board of directors is included as Exhibit (a)(43) hereto and is incorporated herein by reference.

 

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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.

Alcatel Lucent’s board of directors regularly evaluates Alcatel Lucent’s strategic direction and ongoing business plans. As part of this evaluation, Alcatel Lucent’s board of directors has from time to time considered a variety of strategic alternatives for Alcatel Lucent, including additional partnerships or strategic alliances with other participants in the industry, purchases or sales of businesses or assets, or business combination transactions.

On April 16, 2013, shortly following the appointment of Michel Combes as Chief Executive Officer of Alcatel Lucent, Mr. Combes and members of management discussed development of the Shift Plan, a detailed three-year plan announced in June 2013 designed to reposition Alcatel Lucent as a specialist provider of IP and Cloud Networking and Ultra-Broadband Access, the high-value equipment and services essential to high-performance networks. The Shift Plan was based on their expectations for industry trends in the telecommunications industry, including accelerated changes driven by the adoption of new mobile devices and of new applications and services, greater connectivity to the internet and a dramatic increase in the number of connected devices, and pressure on telecommunications providers to improve their networks in terms of coverage, capacity and quality. Mr. Combes and these members of management considered that the Shift Plan would improve the ability of Alcatel Lucent to compete effectively over the long-term, and in this context that Alcatel Lucent could consider concentrating on key areas or combining some or all of its businesses with those of other companies based on the need for scale in an economically challenging environment.

In the spring and summer of 2013, although the priority of Alcatel Lucent’s management remained the implementation of the Shift Plan, Alcatel Lucent’s management also considered that strategic transactions could assist in repositioning Alcatel Lucent’s business and in improving Alcatel Lucent’s profitability and financial position. Therefore, in parallel to the execution of the Shift Plan and as a way to create optionality, Alcatel Lucent’s management contacted representatives of Nokia, Company A and Company B to discuss possible strategic transactions.

On June 18, 2013, Alcatel Lucent’s board of directors met in Paris, France, where Michel Combes provided the board members with an update regarding recent discussions with the potential partners in the telecommunications industry regarding potential strategic alternatives.

On July 13 and 14, 2013, representatives of Alcatel Lucent, including Michel Combes, met with representatives of Company A to further explore a possible joint venture involving the wireless businesses of Alcatel Lucent and Company A or contribution of the wireless business of Company A to Alcatel Lucent in exchange for an interest in Alcatel Lucent.

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.

On July 30, 2013, Alcatel Lucent’s board of directors met in Paris, France, and decided that, although the priority of Alcatel Lucent’s management was the implementation of the Shift Plan, a combination with another partner in the telecommunications industry would be an attractive option to give Alcatel

 

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Lucent the critical size needed to compete in the telecommunications industry, particularly in the field of mobile networks. Alcatel Lucent’s board of directors noted that no clear strategic alternative had emerged to date, but that contacts with potential partners in the telecommunications industry were ongoing. Alcatel Lucent’s board of directors agreed to continue the ongoing discussions with potential partners.

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’s board of directors, Michel Combes, Chief Executive Officer, 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.

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.

On October 5, 2013, Alcatel Lucent’s board of directors met by conference call. Philippe Camus provided the board with an update of preliminary discussions with Nokia with respect to the potential combination of Nokia Solutions and Networks and Alcatel Lucent. Mr. Camus also indicated that a potential combination of the businesses of Alcatel Lucent and Nokia had been discussed in general terms, though the material terms of any potential transaction (including any premium for Alcatel Lucent’s shareholders) had not been fully developed. Following further discussion, Alcatel Lucent’s board of directors determined that, although a combination with Nokia could be advantageous to Alcatel Lucent, management should remain focused on implementation of the financial restructuring elements of the Shift Plan. Alcatel Lucent’s board of directors considered that a possible transaction with Nokia could be reassessed at a later time in light of Alcatel Lucent’s financial situation and other potential alternatives available at such time.

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.

In late 2013, representatives of Alcatel Lucent, including Michel Combes and Philippe Keryer, also held further meetings with senior management of Company A regarding a possible strategic alliance between the two companies. Company A expressed an interest in continuing to explore a possible strategic alliance.

On January 2, 2014, Alcatel Lucent entered into a confidentiality agreement with Company A to further explore a strategic alliance between the two companies. Potential transaction structures for the strategic alliance were discussed, including the contribution of the wireless businesses of Company A and Alcatel Lucent to a joint venture in which Alcatel Lucent would hold a majority interest and Company A would hold a minority interest. Alcatel Lucent and Company A also explored the possibility, concurrently with the joint venture, that Company A would have acquired a minority interest in Alcatel Lucent on terms to be defined.

 

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In January 2014, Alcatel Lucent retained Zaoui & Co. S.A. (“Zaoui”) as its financial advisor to assist in exploring potential strategic transactions.

On January 30, 2014, representatives of Alcatel Lucent’s financial and legal advisors, Zaoui and Sullivan & Cromwell, met with representatives of Company A’s financial and legal advisors to discuss potential transaction structures.

On February 14, 2014, representatives of Alcatel Lucent, including Jean Raby and Philippe Keryer, met with representatives of Company A to discuss a possible strategic alliance. Zaoui participated in the discussions. During this meeting, representatives of Alcatel Lucent presented an overview of the group and its strategy with a particular focus on the wireless activities. Representatives of Company A made a similar presentation. Alcatel Lucent and Company A representatives discussed the framework for a potential strategic alliance.

In March and April 2014, Alcatel Lucent continued to engage in periodic contacts with Nokia, Company A and Company B regarding possible strategic transactions.

On May 28, 2014, Alcatel Lucent’s board of directors met in Paris, France, and via conference call to discuss possible strategic alternatives. The strategic alternatives considered included a 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, a joint venture between the wireless businesses of Alcatel Lucent and Company A and a combination of the businesses of Alcatel Lucent and Company B. Alcatel Lucent’s board of directors also considered narrowing the operational scope of Alcatel Lucent’s wireless business as a base case scenario in order to restore the profitability of Alcatel Lucent’s wireless division.

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.

In the summer of 2014, Alcatel Lucent and Company B also continued to discuss the structure and terms of a possible strategic transaction, including reciprocal diligence exercises. In addition, Alcatel Lucent determined not to pursue further discussions with Company A regarding a possible joint venture involving its wireless business as a result of a failure to agree on a transaction scope and structure that could be implemented within a reasonably acceptable timeframe and remaining differences on proposed governance arrangements for the possible joint venture.

In the summer of 2014, Alcatel Lucent also approached several other parties to explore whether these parties had an interest in a strategic transaction. Other than discussions with Nokia, Company A and Company B, discussions regarding possible strategic transactions between Alcatel Lucent and other parties did not advance beyond initial contact.

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.

 

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On July 30, 2014, Alcatel Lucent’s board of directors met in Boulogne-Billancourt, France, and via conference call to discuss developments in Alcatel Lucent’s industry and possible strategic alternatives available to Alcatel Lucent. Zaoui and Sullivan & Cromwell participated in the discussions of strategic alternatives, including a combination of the businesses of Alcatel Lucent and Company B or the creation of a joint venture involving Alcatel Lucent’s wireless business with the wireless businesses of Company A or Nokia. Alcatel Lucent’s board of directors considered the impact, if any, of recent performance of Alcatel Lucent’s mobile access business on such strategic alternatives, on possible value for the holders of Alcatel Lucent Shares of potential strategic alternatives and key criteria to be taken into consideration by Alcatel Lucent’s board of directors in evaluating such alternatives, taking into account the consequences for employees, and customers and the regulatory constraints and risks associated with each strategic alternative. Alcatel Lucent’s board of directors discussed a number of possible issues with the possible combination with Company B, including in respect of intellectual property, receipt of regulatory approvals and impact on other strategic alternatives under consideration by Alcatel Lucent. In respect of a joint venture involving Alcatel Lucent’s wireless business, Alcatel Lucent’s board of directors considered the financial and operational implications of a separation of the wireless business from Alcatel Lucent’s other businesses.

On August 5, 2014, representatives of Alcatel Lucent met with representatives of Company B to conduct diligence on possible obstacles in connection with a strategic transaction, including pension issues, potential restructuring in France, antitrust issues associated with the wireless business and the risk that the transaction would pose to the intellectual property revenues of Company B. Jean Raby subsequently met with the Company B’s head of strategy to discuss these issues and the possible transaction. Company B subsequently stated an interest in acquiring all of Alcatel Lucent, excluding Alcatel Lucent’s wireless business, pension liabilities and Alcatel Lucent Submarine Networks (“ASN”). Alcatel Lucent did not indicate agreement to the proposed scope of the possible transaction. Following this meeting, Alcatel Lucent and Company B continued limited due diligence exercises, including with respect to Alcatel-Lucent Shanghai Bell, Co. Ltd. (“ASB”), Alcatel Lucent’s wireless business and IP Routing business and Company B again proposed a potential acquisition by Company B of Alcatel Lucent, excluding Alcatel Lucent’s wireless business, pension liabilities and ASN. In response to this proposal, Alcatel Lucent proposed as an alternative that the parties investigate a possible full combination of the businesses of Alcatel Lucent and Company B.

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.

 

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On September 15, 2014, Alcatel Lucent’s board of directors met in Boulogne-Billancourt, France, and via conference call. During the meeting, representatives of Alcatel Lucent’s management provided an update on the ongoing strategic discussions regarding a potential acquisition of Alcatel Lucent’s wireless business by Nokia and a combination of the businesses of Alcatel Lucent and Company B and in particular the mains issues and possible consequences of each strategic alternative. Alcatel Lucent’s board of directors also discussed the alternatives available to Alcatel Lucent in the event that such discussions would not result in an offer. Zaoui and Sullivan & Cromwell participated in the discussions of strategic alternatives, and discussed their analysis of the risks related to the strategic alternatives under consideration by Alcatel Lucent. Alcatel Lucent’s board of directors requested that management continue to explore strategic alternatives.

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 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, 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 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 3, 2014, Alcatel Lucent’s board of directors met in Boulogne-Billancourt, France, and via conference call to discuss developments with respect to the strategic alternatives under consideration by Alcatel Lucent, in particular the possible sale of Alcatel Lucent’s wireless business to Nokia or a combination of the businesses of Alcatel Lucent and Company B. Management presented information regarding the proposed transaction structures, including the proposed scope of each potential transaction, process for implementation (in particular with respect to regulatory risks, and issues relating to intellectual property revenues), feedback from the counterparties and process and timing for further discussions. Alcatel Lucent’s board of directors, at the recommendation of management,

 

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approved continued discussions with Nokia with the objective of receiving a satisfactory non-binding indicative offer in a reasonable timeframe.

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 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.

On October 29, 2014, Alcatel Lucent’s board of directors met in Murray Hill, United States, and via conference call and video conference. Representatives of Alcatel Lucent’s management and Zaoui participated in the meeting. Alcatel Lucent’s management presented information on the ongoing strategic discussions regarding a potential sale of Alcatel Lucent’s wireless business to Nokia or a combination of the businesses of Alcatel Lucent and Company B, and in particular the timing and scope of each potential transaction, significant remaining issues in relation to each potential transaction, and proposed steps for resolving such issues. Alcatel Lucent’s board of directors discussed the viability of each of those two potential transactions and their relative advantages and disadvantages, including timing of a potential transaction and the possible value to be created for Alcatel Lucent’s stakeholders in connection with any potential transaction. Alcatel Lucent’s board of directors also considered possible valuation scenarios in respect of its wireless business, the expected process and timeline for a potential acquisition and strategic alternatives available to Alcatel Lucent following a sale of its wireless business. Alcatel Lucent’s board of directors also considered potential alternatives to these two transactions, and concluded that other alternatives were unlikely to be achieved within a reasonable timeframe. Alcatel Lucent’s board of directors confirmed that management could continue its discussions with respect to the potential transactions with Nokia and Company B.

 

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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 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.

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, 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 3, 2014, Alcatel Lucent’s board of directors met in Boulogne-Billancourt, France, and via conference call, to discuss the status of negotiations with respect to a potential acquisition of Alcatel Lucent’s wireless business by Nokia and a combination of certain of the businesses of Alcatel Lucent and Company B. With respect to a potential acquisition of Alcatel Lucent’s wireless business by Nokia, Alcatel Lucent’s board of directors considered the terms of the transaction that remained subject to

 

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negotiation, including calculation of purchase price, closing conditions (including Nokia’s request to condition the transaction on obtaining consents from key customers of Alcatel Lucent) and allocation of risk with respect to required regulatory approvals. With respect to a possible combination with Company B, Alcatel Lucent’s board of directors considered the scope of the transaction and material issues in relation to a potential transaction, including regulatory approvals, intellectual property and pension liabilities. In light of the lack of significant progress in late 2014 to advance negotiations between Alcatel Lucent and Company B on either a possible acquisition of Alcatel Lucent, excluding Alcatel Lucent’s wireless business, pension liabilities and ASN, or a possible full combination of the businesses of Alcatel Lucent and Company B, Alcatel Lucent suspended discussions with Company B to focus on a possible transaction with Nokia.

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 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.

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 5, 2015, Alcatel Lucent’s board of directors met in Boulogne-Billancourt, France, and via video conference to discuss developments in the negotiation of a strategic transaction with Nokia. Zaoui and Sullivan & Cromwell participated in the meeting. Alcatel Lucent’s board of directors considered the financial and transactional aspects of a potential sale of Alcatel Lucent’s wireless

 

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business to Nokia. Zaoui presented a description of the scope of such an acquisition, as well as a valuation analysis, summary of potential value creation, possible execution risks and likely timing of the transaction. Alcatel Lucent’s board of directors also considered the strategic rationale for a sale of Alcatel Lucent to Nokia, the industry, operational and market factors that supported a combination, and the financial aspects of a combination. Zaoui discussed possible benefits of a combination, including possible synergies and the financial position of the combined businesses and presented a summary of the possible valuation of the combined entity and potential value creation for the shareholders as a result of such combination. Alcatel Lucent’s board of directors concluded by considering the key items to be addressed prior to announcement of a potential acquisition of Alcatel Lucent by Nokia, including satisfactory completion of reciprocal due diligence and valuation processes in respect of Nokia, engagement with key stakeholders and finalizing the transaction documentation. Alcatel Lucent’s board of directors authorized management to continue ongoing negotiations with Nokia.

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 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.

 

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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.

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 13, 2015, Alcatel Lucent’s board of directors met in Boulogne-Billancourt, France, and via conference call and video conference to discuss the key terms of a potential combination of the business of Alcatel Lucent and Nokia, including the ongoing discussions regarding the exchange ratio of a potential exchange offer and the valuation analysis in respect of possible exchange ratios based on the trading price of Alcatel Lucent Shares and Nokia Shares. Alcatel Lucent’s board of directors discussed possible considerations as to the fairness of premiums in the exchange offer and the need for Alcatel Lucent’s board of directors, in the event an acceptable exchange ratio were proposed, to be satisfied as that the Exchange Offer would be reasonably likely to be completed. Alcatel Lucent’s board of directors also discussed possible alternatives to a strategic transaction with Nokia, including a sale of Alcatel Lucent’s wireless business, or another possible business combination or a strategic partnership, and determined that no strategic alternatives were feasible at such time. Alcatel Lucent’s board of directors considered the possible reaction of Alcatel Lucent’s significant customers. Alcatel Lucent’s board of directors also considered the prior discussions by Alcatel Lucent with respect to various strategic alternatives, including discussions on possible transactions with Company A and Company B. Alcatel Lucent’s board of directors considered the terms of a possible transaction to be discussed further with Nokia, including the exchange ratio, certainty of completion of the combination, governance of the combined businesses and the future of the Alcatel Lucent organization and employees.

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.

 

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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 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.

On March 29, 2015, Alcatel Lucent’s board of directors met by conference call. A presentation prepared by Zaoui regarding the financial aspects of the transaction was provided ahead of the meeting. Alcatel Lucent’s management discussed the financial terms of the offer, including an overview of recent performance of Alcatel Lucent Shares and Nokia Shares and other valuation considerations, the anticipated synergies, the proposed operations and governance structure of the combined company following completion of the Exchange Offer and management’s support for the proposed Exchange Offer. Alcatel Lucent’s board of directors then discussed the process for the proposed transaction, fairness considerations in respect of the proposed exchange ratio, the possibility to renegotiate the exchange ratio and the availability of potential alternatives to the proposed transaction. Alcatel Lucent’s board of directors expressed its full support for the Chairman and management team and authorized them to continue discussions with Nokia.

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

 

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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.

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, Alcatel Lucent was advised that 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,

 

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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, Alcatel Lucent was advised that 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 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 A to this Schedule 14D-9. 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 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

 

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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 response offer document approved by the AMF on November 12, 2015 in response to the French Offer 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” in the exchange offer/prospectus 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, Alcatel Lucent’s board of directors met in New York City, United States. The meeting 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 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 updated oral opinion, which was confirmed by delivery of an updated 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, as further described under the section entitled “—Opinions of Alcatel Lucent’s Financial Advisor” below. The updated opinion delivered by Zaoui is attached as Annex B to this Schedule 14D-9. The report on the financial terms of the Exchange Offer by the Independent Expert, which was appointed as independent expert in accordance with Article 261-1 et seq. of the AMF General Regulation, was delivered to Alcatel Lucent’s board of directors on October 28, 2015. Following additional discussion and consideration of the terms and conditions of the Exchange Offer, the participating members of Alcatel Lucent’s board of directors, taking into account the factors described in the section entitled “—Reasons for Alcatel Lucent’s Board Recommendation” below, unanimously 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), 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 recommended that all holders of OCEANEs tender their OCEANEs pursuant to the Exchange Offer.

On November 18, 2015, Nokia filed its Schedule TO with the SEC and commenced the U.S. Offer.

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

 

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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 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” below. 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 to this Schedule 14D-9 as Annex A. 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.

 

   

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 OMX Helsinki Ltd. (“Nasdaq Helsinki”)) of EUR 7.77 on April 13, 2015, as further described in the section entitled “—Background of the Exchange Offer” above, 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:

 

   

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;

 

   

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;

 

   

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

 

   

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.

 

   

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:

 

   

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;

 

   

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;

 

   

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;

 

   

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

 

   

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.

 

   

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

 

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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 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 Press Release on Announcement of the Exchange Offer, a copy of which is included in Exhibit (a)(7) to this Schedule 14D-9 and is incorporated herein by reference.

 

   

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.

 

   

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.

 

   

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.

 

   

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,

 

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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” above.

 

   

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

 

   

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;

 

   

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;

 

   

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;

 

   

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;

 

   

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;

 

   

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

 

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Exchange Offer expected to be accretive to Nokia earnings on a non-IFRS basis (excluding restructuring charges and amortization of intangibles) in 2017;

 

   

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

 

   

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;

 

   

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

 

   

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

 

   

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.

 

   

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” below. 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 to this Schedule 14D-9 as Annex A.

 

   

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;

 

   

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

 

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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.

 

   

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.

 

   

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:

 

   

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

 

   

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

 

   

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

 

   

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

 

   

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:

 

   

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;

 

   

a termination fee of EUR 300 million for termination by Alcatel Lucent for (i) a Nokia Change in Board Recommendation (as defined in the section entitled “The Memorandum of Understanding—Nokia Change in Board Recommendation” in the exchange offer/prospectus) 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;

 

   

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

 

   

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

 

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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.

 

   

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” in the exchange offer/prospectus. Certain other terms of the Memorandum of Understanding that Alcatel Lucent’s board of directors considered important included:

 

   

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 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.

 

   

Ability to Respond to Certain Unsolicited Alternate Proposals. If at any time Alcatel Lucent receives a bona fide written Alternate Proposal (as defined in the section entitled “The Memorandum of Understanding—No Solicitation of Alternate Proposals” in the exchange offer/prospectus) 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 (as defined in the section entitled “The Memorandum of Understanding—No Solicitation of Alternate Proposals” in the exchange offer/prospectus), 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” in the exchange offer/prospectus.

 

   

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 (as defined in the section entitled “The Memorandum of Understanding—Change in Alcatel Lucent Board Recommendation” in the exchange offer/prospectus) 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” in

 

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the exchange offer/prospectus. 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.

 

   

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.

 

   

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 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.

 

   

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.

 

   

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.

 

   

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.

 

   

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

 

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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 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:

 

   

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.

 

   

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.

 

   

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.

 

   

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 (each as defined in the section entitled “The Memorandum of Understanding—Change in Nokia Board Recommendation” in the exchange offer/prospectus), 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” in the exchange offer/prospectus. 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” above, 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.

 

   

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:

 

   

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;

 

   

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;

 

   

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

 

   

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.

 

   

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

 

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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.

 

   

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” above.

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 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 Alcatel Lucent’s Board Recommendation

In accordance with Article 231-19 of the AMF General Regulation, at its meeting on October 28, 2015, the participating members of Alcatel Lucent’s 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 Schedule 14D-9 and certain typographical conventions have been conformed to United States usage.

“The present reasoned opinion has been reached by the following members of Alcatel Lucent’s 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

 

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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:

 

   

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 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:

 

   

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;

 

   

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;

 

   

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;

 

   

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

 

   

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.

 

   

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

 

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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 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.

 

   

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:

 

   

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;

 

   

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;

 

   

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;

 

   

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;

 

   

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;

 

   

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

 

   

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;

 

   

although Nokia has stated that it has suspended 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;

 

   

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.

 

   

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.

 

   

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.

 

   

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 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 Nokia 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:

 

   

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.

 

   

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.

 

   

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.

 

   

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 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.

 

   

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.

 

   

Strategic Decision by Alcatel Lucent. Alcatel Lucent’s board of directors considered Alcatel Lucent’s decision, announced on October 6, 2015, that it is to 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 main following conditions:

 

   

the Minimum Tender Condition; and

 

   

the Nokia Shareholder Approval.

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

 

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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 which was 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.

 

   

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.

 

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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 OCEANE 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 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 holders of OCEANEs.

 

   

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

 

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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 & 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;

 

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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.

 

   

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 “—Employment in France” above, 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

 

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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 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

 

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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 is subject to specific risks, which the holders of OCEANEs will have to appreciate based on their specific situation and the then prevailing circumstances.

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” in the exchange offer/prospectus, which is incorporated herein by reference, the prospectus applicable to each series of OCEANEs and the Independent Expert Report attached as Annex C to this Schedule 14D-9 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 of the Exchange Offer, as it may be extended (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.

 

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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 Performance Shares and (ii) Alcatel Lucent Shares to be granted 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.”

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” above. 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 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” above.

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 to this Schedule 14D-9 and is incorporated herein by reference.

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 this Schedule 14D-9 and are incorporated herein by reference, and Alcatel Lucent urges holders of Alcatel Lucent Securities to carefully read the Independent Expert Report in its entirety.

 

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Intent to Tender

Subject to the following paragraph, 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 of the Exchange Offer, as it may be extended (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 has been informed that, as of the date of this Schedule 14D-9, 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.

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 “Item 3. Effect of the Exchange Offer on Alcatel Lucent Shares, Alcatel Lucent ADSs, OCEANEs and Share- and Equity-Based Incentive Plans” above.

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

 

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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 date of the opening of the Exchange Offer, other than those Alcatel Lucent Securities held (i) to be granted in lieu of accelerated Performance Shares and (ii) to be granted 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 latest practicable date before the date of this Schedule 14D-9, 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 Performance Shares and (ii) 3 513 332 Alcatel Lucent Shares were reserved to be granted 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.

For further information on the undertaking to tender accelerated Alcatel Lucent Stock Options and Performance Shares, see the section entitled “The Offers—Additional Exchange Mechanism” in the exchange offer/prospectus, which is incorporated herein by reference.

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 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,

 

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are attached as Annex A and Annex B, respectively, to this Schedule 14D-9. The summary of the written opinions of Zaoui contained in this Schedule 14D-9 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. In 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;

 

   

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”);

 

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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 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

 

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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 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.

 

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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   

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

 

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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

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

 

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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

Nokia Technologies Peers:

 

   

Interdigital Inc.

 

   

Universal Display Corporation

 

   

Tessera Technologies Inc.

 

   

Dolby Laboratories Inc.

 

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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   

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.

 

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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 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

 

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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 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.

 

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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” above 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” above 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” above 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 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

 

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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 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

 

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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

     12.9x         11.0x   

Determination of Implied Exchange Ratio

Zaoui then calculated implied exchange ratio reference ranges on a fully diluted basis using the Updated Alcatel Lucent Street Estimates and the Updated 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

 

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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 June 30, 2015 and subtracted from the implied enterprise value the value of debt and non-controlling interests as of June 30, 2015. 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

   3.30       6.54         0.504x   

Low End

   3.25       6.30         0.515x   

The selected comparable companies analysis performed by Zaoui indicated a range of implied exchange ratios (on a fully diluted basis) of 0.504x to 0.515x, as compared to the exchange ratio of 0.550x.

Discounted Cash Flow Analysis Excluding Synergies

Alcatel Lucent DCF

Zaoui updated its 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 June 30, 2015 to December 31, 2019, based on the Updated 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 Updated 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 June 30, 2015, subtracted the value of Alcatel Lucent’s debt as of June 30, 2015 (assuming full dilution from the 2018 OCEANEs) and subtracted the value of non-controlling interests as of June 30, 2015 to arrive at a range of implied equity value per Alcatel Lucent Share of EUR 3.00 to EUR 3.77.

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 Updated Alcatel Lucent Street Forecasts and extrapolated by Zaoui.

 

     Year Ended December 31,  
      2015E      2016E      2017E      2018E      2019E  
     (in EUR million)  

Unlevered free cash flow

     436         530         903         962         1 129   

 

 

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Nokia DCF

Zaoui updated its 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 June 30, 2015 to December 31, 2019, based on the Updated Nokia Street Forecasts and extrapolated by Zaoui until 2019; and (2) the terminal 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 Updated 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 June 30, 2015, subtracted the value of Nokia’s debt as of June 30, 2015 (assuming full dilution from the convertible bonds) and subtracted the value of non-controlling interests as of June 30, 2015 to arrive at a range of implied equity value per Nokia Share of EUR 6.02 to EUR 7.38.

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 Updated Nokia Street Forecasts and extrapolated by Zaoui.

 

     Year Ended December 31,  
      2015E      2016E      2017E      2018E      2019E  
     (in EUR million)  

Unlevered free cash flow

     1 300         1 515         1 504         1 550         1 642   

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 as indicated in 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 as indicated in 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

   3.77       7.38         0.511x   

Low End

   3.00       6.02         0.497x   

The discounted cash flow analysis excluding synergies performed by Zaoui indicated a range of implied exchange ratios (on a fully diluted basis) of 0.497x to 0.511x, as compared to the exchange ratio of 0.550x.

 

 

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General

The preparation of a financial opinion is a complex analytical process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances and, therefore, a financial opinion is not readily susceptible to summary description. In arriving at its fairness determinations, Zaoui considered the results of all of the analyses and did not draw, in isolation, conclusions from or with regard to any factor or analysis that it considered. Rather, Zaoui made its determinations as to fairness on the basis of its experience and professional judgment after considering the results of all of the analyses. No company or transaction used in the above analyses as a comparison is directly comparable to Alcatel Lucent or Nokia or the proposed Transaction.

Zaoui prepared these analyses for purposes or providing its opinions to Alcatel Lucent’s board of directors as to the fairness from a financial point of view to the holders of Alcatel Lucent Shares and Alcatel Lucent ADSs, as of the date of such opinion, of the exchange ratio. These analyses do not purport to be appraisals nor do they necessarily reflect the prices at which businesses or securities actually may be sold. Analyses based upon projections of future results are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by these analyses. Because these analyses are inherently subject to substantial uncertainty, being based upon numerous factors or events beyond the control of the parties or their respective advisors, none of Alcatel Lucent, Nokia, Zaoui or any other person assumes responsibility if future results are materially different from those forecast.

Zaoui’s financial analyses and opinions were only one of many factors taken into consideration by Alcatel Lucent’s board of directors in its evaluation of the Transaction. Consequently, the analyses described above should not be viewed as determinative of the views of Alcatel Lucent’s board of directors or management with respect to the exchange ratio or as to whether Alcatel Lucent’s board of directors would have been willing to determine that a different consideration was fair. The consideration for the Transaction was determined through arm’s-length negotiations between Alcatel Lucent and Nokia and was approved by Alcatel Lucent’s board of directors. Zaoui provided advice to Alcatel Lucent during these negotiations. Zaoui did not recommend any specific exchange ratio to Alcatel Lucent or Alcatel Lucent’s board of directors or that any specific exchange ratio constituted the only appropriate consideration for the Transaction. Zaoui did not express any view on whether Alcatel Lucent’s board of directors should 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.

Alcatel Lucent’s board of directors selected Zaoui as its financial advisor in connection with the Exchange Offer based on various factors and criteria, including Zaoui’s understanding of Alcatel Lucent’s business, Zaoui’s leadership position in and understanding of the French market, and other capabilities and strengths.

In connection with Zaoui’s services as the financial advisor to Alcatel Lucent’s board of directors, Alcatel Lucent has agreed to pay Zaoui a transaction fee of EUR 23.4 million, one-third payable upon announcement of the Exchange Offer and two-thirds payable contingent upon completion of the Exchange Offer and an incentive fee payable contingent upon completion of the Exchange Offer at the discretion of Alcatel Lucent. In addition, Alcatel Lucent has also agreed to pay Zaoui an aggregate retainer fee in respect of the year ended December 31, 2014 of EUR 0.6 million. Alcatel Lucent has also agreed to reimburse Zaoui’s reasonable out-of-pocket expenses incurred in connection with Zaoui’s engagement, and to indemnify Zaoui against certain liabilities that may arise out of Zaoui’s engagement. Any amount payable by Alcatel Lucent to Zaoui will be grossed up taking into account any tax payable in respect of such amount. Zaoui may also in the future provide financial advisory

 

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services to Alcatel Lucent and its affiliates or Nokia and its affiliates for which Zaoui may receive further compensation.

Report of Independent Financial Expert

Prior to making its determination and recommendation at the meeting of October 28, 2015, Alcatel Lucent’s board of directors received the Independent Expert Report of the Independent Expert, Associés en Finance, in accordance with Article 261-1 et seq. of the AMF General Regulation, including the Independent Expert’s opinion (attestation d’équité), dated as of October 28, 2015, stating that, as of the date of the Independent Expert Report and based upon and subject to the assumptions, qualifications and other considerations set forth therein, the Independent Expert concluded that the terms of the Exchange Offer by Nokia for Alcatel Lucent Shares and OCEANEs are fair.

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 Independent Expert Report, and Addendum, dated November 9, 2015, are attached as Annex C to this Schedule 14D-9 and are incorporated herein by reference, and Alcatel Lucent urges holders of Alcatel Lucent Securities to carefully read the Independent Expert Report in its entirety.

Item 5. Persons/Assets, Retained, Employed, Compensated or Used.

Alcatel Lucent retained Zaoui as its financial advisor in connection with the Exchange Offer. Information pertaining to the retention of Zaoui in “Item 4. The Solicitation or Recommendation—Opinion of Alcatel Lucent’s Financial Advisor” is incorporated herein by reference.

Alcatel Lucent retained the Independent Expert, Associés en Finance, pursuant to Article 261-1 et seq. of the AMF General Regulation. Alcatel Lucent has agreed to pay customary fees to the Independent Expert for its services and to reimburse reasonable out-of-pocket expenses in connection therewith.

The Alcatel Lucent French Group Committee, pursuant to Articles L.2323-35 and L. 2323-21 et seq. of the French Labor Code (Code du travail), retained Syndex as advisor in connection with its opinion delivered on June 1, 2015. Alcatel Lucent has agreed, on behalf of the French Group Committee, to pay customary fees to Syndex for its services.

Except as set forth above, neither Alcatel Lucent nor any person acting on its behalf has or currently intends to employ, retain or compensate any person to make solicitations or recommendations to the holders of Alcatel Lucent Securities on its behalf with respect to the Exchange Offer or related matters.

 

 

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Item 6. Interest in Securities of the Subject Company.

During the 60 calendar days prior to the date of this Schedule 14D-9, Alcatel Lucent has not granted any Alcatel Lucent Stock Options, Performance Shares or Performance Units. During the 60 calendar days prior to the date of this Schedule 14D-9 and in the ordinary course, Alcatel Lucent has issued 4 171 834 Alcatel Lucent Shares to employees of Alcatel Lucent (other than executive officers) who have exercised Alcatel Lucent Stock Options and has issued Alcatel Lucent Shares to executive officers who have exercised Alcatel Lucent Stock Options as set forth in the following table.

 

Name

 

Date of Transaction

 

Nature of Transaction

 

No. of Alcatel Lucent
Securities

 

Exercise Price

Mr. Timothy Krause

  September 22, 2015   Cashless exercise of Alcatel Lucent Stock Options   423 Alcatel Lucent Stock Options exercised   EUR 1.893 per Alcatel Lucent Stock Option

Mr. Timothy Krause

  September 22, 2015   Cashless exercise of Alcatel Lucent Stock Options   23 778 Alcatel Lucent Stock Options exercised   EUR 2.271 per Alcatel Lucent Stock Option

Mr. Timothy Krause

  September 22, 2015   Cashless exercise of Alcatel Lucent Stock Options   26 420 Alcatel Lucent Stock Options exercised   EUR 1.893 per Alcatel Lucent Stock Option

Ms. Nicole Gionet

  November 3, 2015   Cashless exercise of Alcatel Lucent Stock Options   6 881 Alcatel Lucent Stock Options exercised   EUR 1.893 per Alcatel Lucent Stock Option

Ms. Nicole Gionet

  November 3, 2015   Cashless exercise of Alcatel Lucent Stock Options   423 Alcatel Lucent Stock Options exercised   EUR 1.893 per Alcatel Lucent Stock Option

Ms. Nicole Gionet

  November 3, 2015   Cashless exercise of Alcatel Lucent Stock Options   11 889 Alcatel Lucent Stock Options exercised   EUR 2.271 per Alcatel Lucent Stock Option

Ms. Nicole Gionet

  November 3, 2015   Cashless exercise of Alcatel Lucent Stock Options   7 926 Alcatel Lucent Stock Options exercised   EUR 1.893 per Alcatel Lucent Stock Option

Mr. Timothy Krause

  November 5, 2015   Cashless exercise of Alcatel Lucent Stock Options   42 272 Alcatel Lucent Stock Options exercised   EUR 1.419 per Alcatel Lucent Stock Option

Mr. Timothy Krause

  November 5, 2015   Cashless exercise of Alcatel Lucent Stock Options   7 926 Alcatel Lucent Stock Options exercised   EUR 1.893 per Alcatel Lucent Stock Option

Mr. Timothy Krause

  November 5, 2015   Cashless exercise of Alcatel Lucent Stock Options   9 247 Alcatel Lucent Stock Options exercised   EUR 3.501 per Alcatel Lucent Stock Option

Mr. Timothy Krause

  November 5, 2015   Cashless exercise of Alcatel Lucent Stock Options   12 110 Alcatel Lucent Stock Options exercised   EUR 3.596 per Alcatel Lucent Stock Option

In addition, on October 28, 2015, Alcatel Lucent’s board of directors resolved to grant a maximum amount of 3 513 332 unrestricted Alcatel Lucent Shares 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, subject to the conditions described in the section entitled “Item 3. Past Contacts, Transactions, Negotiations and Agreements—Effect of the Exchange Offer on Alcatel Lucent Shares, Alcatel Lucent ADSs, OCEANEs and Share- and Equity-Based Incentive Plans—Distribution of Unrestricted Alcatel Lucent Shares” above. The executive officers of Alcatel Lucent have been allocated a maximum amount of 275 000 unrestricted Alcatel Lucent Shares as follows: Mr. Jean Raby (95 000 Alcatel Lucent Shares), Mr. Tim Krause (35 000 Alcatel Lucent Shares), Mr. Philippe Guillemot (107 500 Alcatel Lucent Shares) and Ms. Nicole Gionet (37 500 Alcatel Lucent Shares).

 

 

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Other than as set forth above, no transactions with respect to Alcatel Lucent Securities have been effected during the 60 calendar days prior the date of this Schedule 14D-9, by Alcatel Lucent or, to Alcatel Lucent’s knowledge after making reasonable inquiry, by any of its executive officers, directors, affiliates or subsidiaries.

Item 7. Purposes of the Transaction and Plans or Proposals.

Subject Company Negotiations

Except as otherwise described in this Schedule 14D-9, Alcatel Lucent is not undertaking or engaged in any negotiation in response to the Exchange Offer that relates to or would result in (i) an extraordinary transaction, such as a merger, reorganization or liquidation involving Alcatel Lucent or any subsidiary of Alcatel Lucent; (ii) a purchase, sale or transfer of a material amount of assets of Alcatel Lucent or any subsidiary of Alcatel; (iii) a tender offer for or other acquisition of Alcatel Lucent’s securities by Alcatel Lucent, any subsidiary of Alcatel Lucent, or any other person; or (iv) a material change in the present dividend rate or policy, indebtedness or capitalization of Alcatel Lucent. As described in the Memorandum of Understanding, Alcatel Lucent’s board of directors, in connection with the exercise of its fiduciary duties, is permitted under certain conditions to engage in negotiations in response to an unsolicited alternate proposal.

Transactions and Other Matters

Except as set forth in this Schedule 14D-9, there is no transaction, resolution of Alcatel Lucent’s board of directors, agreement in principle, or signed contract that is entered into in response to the Exchange Offer that relates to or would result in one or more of the matters referred to in the immediately preceding paragraph of this Item 7.

Item 8. Additional Information.

Regulatory Approvals

Pursuant to the Memorandum of Understanding, the filing of the French Offer with the AMF was conditional on the receipt of approvals (or expiration of the relevant waiting periods) from antitrust or similar authorities in nine jurisdictions, including the United States, the European Union and China. In addition, the filing of the French Offer with the AMF was subject to the authorization of the Ministry of Economy, Industry and Digital Technology of the French Republic and the receipt of the required approval of the Committee on Foreign Investment in the United States. These regulatory approvals were received prior to the filing of the French Offer with the AMF.

For further information on required regulatory approvals, see the section entitled “The Exchange Offer—Legal Matters; Regulatory Approvals—Regulatory Approvals for the Exchange Offer” in the exchange offer/prospectus, which is incorporated herein by reference.

Pursuant to the AMF General Regulation, prior to the opening of the French Offer with the AMF, Nokia was required to obtain approvals (or expiration of the relevant waiting periods) from the banking and/or insurance supervisory authorities in Europe (European Central Bank), Luxembourg (Commissariat aux Assurances), and Vermont (United States) (Vermont Department of Financial Regulation), as a result of the indirect change of control, if the Exchange Offer is successful, of the French banking company Electro Banque and the Luxembourg reinsurance company Electro Re, both directly wholly-owned subsidiaries of Alcatel Lucent, as well as the Luxembourg insurance company Electro Assurance and the U.S. insurance company First Beacon Insurance Company, both directly wholly-owned subsidiaries of Electro Re. Nokia obtained the approvals of the Vermont Department of Financial Regulation on

 

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July 9, 2015, the Commissariat aux Assurances on August 14, 2015, and the European Central Bank on October 20, 2015.

Nokia Shareholder Approval Required

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

Alcatel Lucent French Group Committee’s Opinion

In accordance with the Memorandum of Understanding and applicable law, the Alcatel Lucent French Group Committee (Comité de Groupe France) consultation process was completed and the Alcatel Lucent French Group Committee issued its opinion on June 1, 2015. On June 4, 2015, following the issuance of the Alcatel Lucent French Group Committee’s opinion, Alcatel Lucent’s board of directors issued a statement expressing its full support for the proposed combination with Nokia.

Alcatel Lucent Shareholder Approval Not Required

There is no approval required from Alcatel Lucent’s shareholders in connection with the Exchange Offer under applicable French law.

No Appraisal Rights

There are no appraisal rights available to holders of Alcatel Lucent Securities in connection with the Exchange Offer under applicable French law.

Squeeze-Out

Nokia has stated that 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, the implementation of a squeeze-out for the remaining outstanding Alcatel Lucent Shares.

In addition, Nokia has stated that 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 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, the implementation of a squeeze-out for the remaining OCEANEs.

For further information on a squeeze-out, see the section entitled “The Transaction—Intentions of Nokia over the next twelve months—Squeeze-out” in the exchange offer/prospectus, which is incorporated herein by reference.

 

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Delisting and Deregistration

Nokia has stated that, after completion of the Exchange Offer, and as applicable, after any subsequent offering period, Nokia intends, subject to applicable law and securities exchange regulations, to request from Euronext Paris the delisting of 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 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.

For further information on delisting and deregistration, see the section entitled “The Exchange Offer—Certain Consequences of the Exchange Offer—Reduced Liquidity of Alcatel Lucent Securities” in the exchange offer/prospectus, which is incorporated herein by reference.

Termination of Deposit Agreement

Nokia has stated that, as promptly as practicable after completion of the Exchange Offer or the subsequent offering period, if any, Nokia intends, subject to applicable law, to cause Alcatel Lucent to terminate the Alcatel Lucent deposit agreement. Following such termination, the Alcatel Lucent depositary would perform no further acts under the Alcatel Lucent deposit agreement, except to receive and hold (or sell) distributions on the deposited securities and deliver the deposited securities being withdrawn.

For further information on the termination of Alcatel Lucent’s deposit agreement, see the section entitled “The Exchange Offer—Certain Consequences of the Exchange Offer—Termination of the Alcatel Lucent Deposit Agreement” in the exchange offer/prospectus, which is incorporated herein by reference.

Alcatel Lucent Shares on a Fully Diluted Basis

The following table sets forth the number of Alcatel Lucent Shares outstanding as of as of October 31, 2015, the latest practicable date before the date of this Schedule 14D-9, including the number of Alcatel Shares issuable pursuant to the Alcatel Lucent Stock Options, the Performance Shares and the OCEANEs.

 

Description

   Number of Alcatel
Lucent Shares
     Percentage of
Alcatel Lucent
Shares
 

Alcatel Lucent Shares

     2 841 508 155          75.94%   

Alcatel Lucent ADSs

     472 058 361         12.62%   

Alcatel Lucent Shares held in treasury by Alcatel Lucent

     13 005 087         0.35%   

Alcatel Lucent Shares held in treasury by subsidiaries of Alcatel Lucent

     27 110 613         0.72%   

Alcatel Lucent Stock Options(1)

     81 040 440         2.17%   

Performance Shares(2)

     18 217 530         0.49%   

2018 OCEANEs(3)

     440 261 224         11.77%   

2019 OCEANEs(3)

     214 400 000         5.73%   

2020 OCEANEs(3)

     146 559 993         3.92%   
  

 

 

    

 

 

 

Total Alcatel Lucent Shares on a Fully Diluted Basis

     3 741 987 342         100.00%   

 

(1) Includes Alcatel Lucent Stock Options granted prior to the date of the Memorandum of Understanding which Alcatel Lucent’s board of directors has resolved to accelerate.

 

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(2) Includes Performance Shares granted prior to the date of the Memorandum of Understanding which Alcatel Lucent’s board of directors has resolved to accelerate, but excludes those Performance Shares granted pursuant to the 2015 Performance Share Plan, which will not be accelerated in connection with the Exchange Offer and will remain subject to presence and performance conditions.
(3) Reflects adjustment to the applicable conversion/exchange ratio of the OCEANEs as a result of the opening of the Exchange Offer.

Ownership of Alcatel Lucent Shares

The following table sets forth certain information known to Alcatel Lucent concerning the ownership of Alcatel Lucent Shares as of December 31, 2014.

 

     Alcatel Lucent Shares outstanding
as of December 31, 2014
    Theoretical Voting Rights
based on Alcatel Lucent
Shares outstanding as of
December 31, 2014(1)
    Voting Rights Exercisable
at General Meeting
based
on Alcatel Lucent Shares
outstanding as of
December 31, 2014(2)
 

Name of Holder of Alcatel
Lucent Shares

  Number of
Alcatel
Lucent
Shares
    Percentage
of Alcatel
Lucent
Shares
    Double
Voting
Rights
    Total
Number of
Votes
    Percentage
of Votes
    Total
Number of
Votes
    Percentage
of Votes
 

The Capital Group Companies, Inc.(3)

    290 280 811        10.29     —          290 280 811        10.11     290 280 811        10.26

BlackRock Inc.(3)

    136 616 484        4.84     —          136 616 484        4.76     136 616 484        4.83

Caisse des Dépôts et Consignations(3)(4)(5)

    100 901 700        3.58     8 243 622        109 145 322        3.80     109 145 322        3.86

Amundi(3)

    84 642 286        3.00     —          84 642 286        2.95     84 642 286        2.99

DNCA Finance(5)

    83 884 900        2.97     —          83 884 900        2.92     83 884 900        2.96

FCP 2AL(3)

    34 418 607        1.22     33 969 215        68 387 822        2.38     68 387 822        2.42

Other institutional investors in France(5)(6)

    107 521 500        3.81     —          107 521 500        3.75     107 521 500        3.80

Alcatel Lucent Shares held in treasury by Alcatel Lucent(7)

    13 010 214        0.46     —          13 010 214        0.45     —          —     

Alcatel Lucent Shares held in treasury by subsidiaries of Alcatel Lucent(7)

    27 110 113        0.96     —          27 110 113        0.94     —          —     

Public

    1 942 045 655        68.86     7 947 675        1 949 993 330        67.93     1 949 993 330        68.89
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

    2 820 432 270        100.00     50 160 512        2 870 592 782        100.00     2 830 472 455        100.00

 

(1) Theoretical voting rights include the Alcatel Lucent Shares held by Alcatel Lucent and its subsidiaries which do not have voting rights.
(2) The voting rights exercisable at the General Meeting of holders of Alcatel Lucent Shares do not include Alcatel Lucent Shares with no voting rights.
(3) Information based on declarations made by the holders of Alcatel Lucent Shares.
(4) Includes Alcatel Lucent Shares held by BPI Participations France.
(5) Information based on Alcatel Lucent TPI Report as of June 30, 2014 and IPREO shareholders report as of December 31, 2014.
(6) Other institutional investors in France holding, individually, more than 0.50% of the Alcatel Lucent Shares.
(7) Alcatel Lucent Shares held in treasury by Alcatel Lucent or its subsidiaries do not have voting rights pursuant to applicable French law so long as held in treasury.

 

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The following table sets forth certain information known to Alcatel Lucent concerning the ownership of Alcatel Lucent Shares as of June 30, 2015.

 

     Alcatel Lucent Shares outstanding
as of June 30, 2015
    Theoretical Voting Rights
based on Alcatel Lucent
Shares outstanding as of
June 30, 2015(1)
    Voting Rights Exercisable
at General Meeting
based
on Alcatel Lucent Shares
outstanding as of
June 30, 2015(2)
 

Name of Holder of Alcatel
Lucent Shares

  Number of
Alcatel
Lucent
Shares
    Percentage
of Alcatel
Lucent
Shares
    Double
Voting
Rights
    Total
Number of
Votes
    Percentage
of Votes
    Total
Number of
Votes
    Percentage
of Votes
 

The Capital Group Companies, Inc.(3)

    281 970 300        9.95     —          281 970 300        9.78     281 970 300        9.92

Odey Asset Management, LLP(3)

    139 392 500        4.92     —          139 392 500        4.84     139 392 500        4.90

BlackRock Inc.(3)

    114 609 500        4.04     —          114 609 500        3.98     114 609 500        4.03

Caisse des Dépôts et Consignations(3)(4)

    101 498 600        3.58     8 243 622        109 742 222        3.81     109 742 222        3.86

DNCA(3)

    85 074 900        3.00     —          85 074 900        2.95     85 074 900        2.99

Aviva Plc(3)

    56 354 800        1.99     —          56 354 800        1.95     56 354 800        1.98

Amundi(3)(5)

    42 737 400        1.51     —          42 737 400        1.48     42 737 400        1.50

FCP 2AL(5)

    32 778 404        1.16     32 708 499        65 486 903        2.27     65 486 903        2.30

Other institutional investors(3)

    1 129 716 700        39.86     18 173        1 129 734 873        39.19     1 129 734 873        39.74

Alcatel Lucent Shares held in treasury by Alcatel Lucent(6)

    13 006 408        0.46     —          13 006 408        0.45     —          —     

Alcatel Lucent Shares held in treasury by subsidiaries of Alcatel Lucent(6)

    27 110 113        0.96     —          27 110 113        0.94     —          —     

Public

    810 210 667        28.58     7 269 016        817 479 683        28.36     817 479 683        28.76

Total

    2 834 460 292        100.00     48 239 310        2 882 699 602        100.00     2 842 583 081        100.00

 

(1) Theoretical voting rights include the Alcatel Lucent Shares held by Alcatel Lucent and its subsidiaries which do not have voting rights.
(2) The voting rights exercisable at the General Meeting of holders of Alcatel Lucent Shares do not include Alcatel Lucent Shares with no voting rights.
(3) Information based on Alcatel Lucent TPI Report as of June 30, 2015 and IPREO shareholders report as of June 30, 2015.
(4) Includes Alcatel Lucent Shares held by BPI Participations France.
(5) Information based on declarations made by the holders of Alcatel Lucent Shares.
(6) Alcatel Lucent Shares held in treasury by Alcatel Lucent or its subsidiaries do not have voting rights pursuant to applicable French law so long as held in treasury.

Consequences Under Agreements Entered Into by Alcatel Lucent in the Event of a Change of Control

OCEANEs

Under the terms of each of the OCEANEs, the opening of the Exchange Offer will constitute a “change of control” with respect to the OCEANEs which would result in, among other things, a temporary adjustment to the conversion/exchange ratio applicable to each series of OCEANEs and the right of holders of OCEANEs to request early redemption of outstanding OCEANEs during a specified period, at a price in cash equal to par plus, as applicable, accrued interest from the date the interest was last paid preceding the date of early redemption, to the date set for the early redemption.

For further information 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” in the exchange offer/prospectus, which is incorporated herein by reference.

 

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Senior Notes

In December 2010, Alcatel Lucent issued Senior Notes due January 15, 2016 with an 8.50% coupon in an aggregate amount of EUR 500 million, of which Alcatel Lucent repurchased in an aggregate principal amount of EUR 75 243 000 in May 2013 and EUR 210 391 000 in July 2014. In July 2013, Alcatel-Lucent USA Inc. issued Senior Notes due January 1, 2020 with an 8.875% coupon in an aggregate principal amount of USD 500 million. In November 2013, Alcatel-Lucent USA Inc. issued Senior Notes due November 15, 2020 with a 6.75% coupon in an aggregate principal amount of USD 1 000 million, of which Alcatel-Lucent USA Inc. repurchased in an aggregate principal amount of USD 300 million in September 2015. In December 2013, Alcatel-Lucent USA Inc. issued Senior Notes due July 1, 2017 with a 4.625% coupon in an aggregate principal amount of USD 650 million.

Under the terms of each series of notes, the settlement of the Exchange Offer is expected to constitute a “change of control”, which is defined, among other things, as the acquisition by any person of more than 50% of the Alcatel Lucent Shares entitled to vote for directors of Alcatel Lucent. As a result, Alcatel Lucent or Alcatel-Lucent USA Inc., as applicable, will be required to offer to repurchase all of the notes of each series at a cash price equal to 101% of their respective principal amounts, plus any accrued and unpaid interest, and to repurchase all notes tendered for purchase in such offer. Notice of the offer to repurchase must be distributed to holders of the notes within 30 calendar days of the change of control and specify a date of repurchase no earlier than 30 calendar days and no later than 60 calendar days from the date of the delivery of such notice. The timing and conduct of any offers to repurchase will be subject to applicable securities laws and regulations. In the event that Alcatel-Lucent USA Inc. repurchases not less than 90% of the aggregate principal amount of notes of any series upon a change of control, Alcatel-Lucent USA Inc. will have the right, upon not less than 30 calendar days’ notice nor more than 60 calendar days’ notice, to redeem all the notes of such series that remain outstanding at the same purchase price. This redemption right is only applicable to the notes issued by Alcatel-Lucent USA Inc. and not Alcatel Lucent’s Senior Notes due January 15, 2016.

Other Agreements

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 completion of the 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.

Except as set forth above, Alcatel Lucent is not aware of any material agreements that could be amended or terminated solely as a result of a change of control of Alcatel Lucent.

Cautionary Statement Regarding Forward-Looking Statements

This Schedule 14D-9 contains forward-looking statements that reflect Alcatel Lucent’s current expectations and views of future events and developments. Some of these forward-looking statements can be identified by terms and phrases such as “anticipate,” “should,” “likely,” “foresee,” “believe,” “estimate,” “expect,” “intend,” “continue,” “could,” “may,” “plan,” “project,” “predict,” “will” and similar expressions. These forward looking statements are subject to a number of risks and uncertainties, many of which are beyond Alcatel Lucent’s control, which could cause actual results to differ materially from such statements. These forward-looking statements are based on Alcatel Lucent’s beliefs,

 

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assumptions and expectations of future performance, taking into account the information currently available to us. These forward-looking statements are only predictions based upon Alcatel Lucent’s current expectations and views of future events and developments and are subject to risks and uncertainties that are difficult to predict because they relate to events and depend on circumstances that will occur in the future. Risks and uncertainties include: the fixed nature of the exchange ratio, changes in the value of Nokia Shares; the effect of the issuance of Nokia Shares in connection with the Exchange Offer; the successful implementation of business or integration plans following completion of the Exchange Offer; the accuracy of estimates dependent on external factors; the consequences of a change of control in respect of Alcatel Lucent’s indebtedness; the impact of the Exchange Offer on the OCEANEs; the impact of a change of control on Alcatel Lucent’s agreements with third parties; the actual financial impact of the Exchange Offer; the accuracy of financial information regarding the combined businesses; the effect of the Exchange Offer on trading markets for Alcatel Lucent Securities; the impact of the reduced ownership of holders of Alcatel Lucent Securities in the combined company; future issuances of additional Nokia Shares or other securities; the success of the listing of the Nokia Shares on the Euronext Paris; the impact of financial interests of executive officer and directors of Alcatel Lucent in the Exchange Offer; the ability of holders of Nokia Shares to exercise voting rights; the effects of implementation of the squeeze-out; the consequences of failing to complete the squeeze-out; the possible adverse tax consequences resulting from a change of ownership of Alcatel Lucent; the ability of holders of Nokia Shares to exercise preemptive rights; and the impact on the combined company (after giving effect to the proposed transaction with Nokia) of any of the foregoing risks or forward-looking statements; as well as other risk factors listed from time to time in Nokia’s or Alcatel Lucent’s filings with the SEC.

The forward-looking statements should be read in conjunction with the other cautionary statements that are included elsewhere, including the section entitled “Risk Factors” in the Form F-4, the most recent annual reports of Alcatel Lucent and Nokia on Form 20-F, reports furnished by Alcatel Lucent and Nokia on Form 6-K, and any other documents that Alcatel Lucent or Nokia has filed with the SEC. Any forward-looking statements made in this communication are qualified in their entirety by these cautionary statements, and there can be no assurance that the actual results or developments anticipated by Alcatel Lucent will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, Alcatel Lucent or its business or operations. Except as required by law, Alcatel Lucent undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Where You Can Find Additional Information

Alcatel Lucent and Nokia are subject to the informational requirements of the Exchange Act and in accordance therewith each file periodic reports and other information with the SEC relating to their respective businesses, financial condition and other matters. Copies of such reports and other information can be obtained at prescribed rates from the Public Reference Section of the SEC at 100 F Street, N.E., Washington, D.C. 20549, or free of charge at the web site maintained by the SEC at http://www.sec.gov.

The SEC allows Alcatel Lucent to “incorporate by reference” information into this Schedule 14D-9, which means that Alcatel Lucent can disclose important information to you by referring you to another document filed separately with the SEC. The information incorporated by reference is deemed to be part of this Schedule 14D-9, except for any information superseded by information contained in or incorporated by reference into this Schedule 14D-9.

This Schedule 14D-9 relates to the Exchange Offer by Nokia to exchange all Alcatel Lucent Securities for Nokia Shares. This Schedule 14D-9 includes the solicitation/recommendation of Alcatel Lucent with respect to the Exchange Offer, and does not constitute or form part of any offer to exchange, or a

 

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solicitation of an offer to exchange, any Alcatel Lucent Securities in any jurisdiction. This Schedule 14D-9 is not a substitute for the tender offer statement on Schedule TO or the exchange offer/prospectus included in the Registration Statement on Form F-4 (File No. 333-206365) filed by Nokia with the SEC, the listing prospectus filed by Nokia with the Finnish Financial Supervisory Authority, the tender offer document (note d’information) filed by Nokia with the AMF or the response document (note en réponse) filed by Alcatel Lucent with the AMF (including the letter of transmittal and related documents and as amended and supplemented from time to time, the “Exchange Offer Documents”). No offering of securities shall be made in the United States except by means of a prospectus meeting the requirements of Section 10 of the U.S. Securities Act of 1933. The Exchange Offer will be made only through the Exchange Offer Documents.

The making of the proposed exchange offer to specific persons who are residents in or nationals or citizens of jurisdictions outside France or the United States or to custodians, nominees or trustees of such persons (the “Excluded Shareholders”) may be made only in accordance with the laws of the relevant jurisdiction. It is the responsibility of the Excluded Shareholders wishing to accept an exchange offer to inform themselves of and ensure compliance with the laws of their respective jurisdictions in relation to the proposed exchange offer. The tender offer will be made only through the Exchange Offer Documents.

INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE EXCHANGE OFFER DOCUMENTS AND ALL OTHER RELEVANT DOCUMENTS THAT NOKIA OR ALCATEL LUCENT HAS FILED OR MAY FILE WITH THE SEC, AMF, NASDAQ HELSINKI OR FINNISH FINANCIAL SUPERVISORY AUTHORITY WHEN THEY BECOME AVAILABLE BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION THAT INVESTORS AND SECURITY HOLDERS SHOULD CONSIDER BEFORE MAKING ANY DECISION REGARDING THE EXCHANGE OFFER.

The information contained in this Schedule 14D-9 must not be published, released or distributed, directly or indirectly, in any jurisdiction where the publication, release or distribution of such information is restricted by laws or regulations. Therefore, persons in such jurisdictions into which this Schedule 14D-9 is published, released or distributed must inform themselves about and comply with such laws or regulations. Nokia and Alcatel Lucent do not accept any responsibility for any violation by any person of any such restrictions.

The Exchange Offer Documents and other documents referred to above, if filed or furnished by Nokia or Alcatel Lucent with the SEC, as applicable, will be available free of charge at the SEC’s website (www.sec.gov).

Nokia’s tender offer document (note d’information) and Alcatel Lucent’s response document (note en réponse), containing detailed information with regard to the French Offer, are available on the websites of the AMF (www.amf-france.org), Nokia (http:// nokia.com/) and Alcatel Lucent (www.alcatel-lucent.com).

 

 

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Item 9. Exhibits.

The following Exhibits are filed herewith or incorporated herein by reference.

 

Exhibit No.

  

Description

(a)(1)

   Exchange Offer/Prospectus, dated November 12, 2015 (incorporated by reference to Amendment No. 3 to the Registration Statement on Form F-4 filed with the SEC by Nokia on November 12, 2015)

(a)(2)

   Form of Letter of Transmittal for Certificated Alcatel Lucent ADSs (incorporated by reference to Exhibit 99.1 to Amendment No. 3 to the Registration Statement on Form F-4 filed with the SEC by Nokia on November 12, 2015)

(a)(3)

   Form of Letter of Transmittal for book-entry only Alcatel Lucent ADSs (incorporated by reference to Exhibit 99.2 to Amendment No. 3 to the Registration Statement on Form F-4 filed with the SEC by Nokia on November 12, 2015)

(a)(4)

   Notice of Guaranteed Delivery (Alcatel Lucent ADSs) (incorporated by reference to Exhibit 99.3 to Amendment No. 3 to the Registration Statement on Form F-4 filed with the SEC by Nokia on November 12, 2015)

(a)(5)

   Letter to Clients (incorporated by reference to Exhibit 99.4 to Amendment No. 3 to the Registration Statement on Form F-4 filed with the SEC by Nokia on November 12, 2015)

(a)(6)

   Letter to Brokers (incorporated by reference to Exhibit 99.5 to Amendment No. 3 to the Registration Statement on Form F-4 filed with the SEC by Nokia on November 12, 2015)

(a)(7)

   Press Release on Announcement of Exchange Offer, dated April 15, 2015 (incorporated by reference to the filing under Rule 425 with the SEC by Alcatel Lucent on April 16, 2015)

(a)(8)

   Investor Presentation, dated April 15, 2015 (incorporated by reference to the filing under Rule 425 with the SEC by Alcatel Lucent on April 16, 2015)

(a)(9)

   Factsheet, dated April 15, 2015 (incorporated by reference to the filing under Rule 425 with the SEC by Alcatel Lucent on April 16, 2015)

(a)(10)

   Email to Employees from CEO of Alcatel Lucent, dated April 15, 2015 (incorporated by reference to the filing under Rule 425 with the SEC by Alcatel Lucent on April 16, 2015)

(a)(11)

   Letter from Chairman of Nokia, dated April 15, 2015 (incorporated by reference to the filing under Rule 425 with the SEC by Alcatel Lucent on April 16, 2015)

(a)(12)

   Transcript of Call with Alcatel Employees, dated April 15, 2015 (incorporated by reference to the filing under Rule 425 with the SEC by Alcatel Lucent on April 16, 2015)

(a)(13)

   Q&A Regarding Deal Alcatel-Lucent and Nokia, dated April 15, 2015 (incorporated by reference to the filing under Rule 425 with the SEC by Alcatel Lucent on April 16, 2015)

(a)(14)

   Thomson Reuters StreetEvents Edited Transcript, dated April 15, 2015 (incorporated by reference to the filing under Rule 425 with the SEC by Alcatel Lucent on April 16, 2015)

(a)(15)

   Q&A Regarding the Proposed Transaction Between Alcatel-Lucent and Nokia, dated April 15, 2015 (incorporated by reference to the filing under Rule 425 with the SEC by Alcatel Lucent on April 16, 2015)

(a)(16)

   Transcript of Press Conference, dated April 15, 2015 (incorporated by reference to the filing under Rule 425 with the SEC by Alcatel Lucent on April 16, 2015)

 

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Exhibit No.

  

Description

(a)(17)

   Global Sales Advisory: Transaction between Alcatel-Lucent and Nokia, dated April 15, 2015 (incorporated by reference to the filing under Rule 425 with the SEC by Alcatel Lucent on April 16, 2015)

(a)(18)

   Transcript of Call with Alcatel Lucent Employees by Alcatel Lucent’s CEO, dated April 15, 2015 (incorporated by reference to the filing under Rule 425 with the SEC by Alcatel Lucent on April 17, 2015)

(a)(19)

   Press Release on Q1 2015 Results, dated May 7, 2015 (incorporated by reference to the filing under Rule 425 with the SEC by Alcatel Lucent on May 7, 2015)

(a)(20)

   Transcript of Q1 2015 Earnings Call, dated May 7, 2015 (incorporated by reference to the filing under Rule 425 with the SEC by Alcatel Lucent on May 8, 2015)

(a)(21)

   Intranet Posting, dated May 7, 2015 (incorporated by reference to the filing under Rule 425 with the SEC by Alcatel Lucent on May 8, 2015)

(a)(22)

   Transcript of Q1 Quarterly Call, dated May 7, 2015 8:46 am CET (incorporated by reference to the filing under Rule 425 with the SEC by Alcatel Lucent on May 18, 2015)

(a)(23)

   Transcript of Q1 Quarterly Call, dated May 7, 2015 8:58 am CET (incorporated by reference to the filing under Rule 425 with the SEC by Alcatel Lucent on May 18, 2015)

(a)(24)

   Transcript of Q1 Quarterly Call, dated May 7, 2015 10:00 am CET (incorporated by reference to the filing under Rule 425 with the SEC by Alcatel Lucent on May 18, 2015)

(a)(25)

   Transcript of Q1 Quarterly Call, dated May 7, 2015 10:45 am CET (incorporated by reference to the filing under Rule 425 with the SEC by Alcatel Lucent on May 18, 2015)

(a)(26)

   Transcript of Video Interview, dated May 24, 2015 (incorporated by reference to the filing under Rule 425 with the SEC by Alcatel Lucent on June 1, 2015)

(a)(27)

   Press Release on Consultation of French Group Committee, dated June 4, 2015 (incorporated by reference to the filing under Rule 425 with the SEC by Alcatel Lucent on June 4, 2015)

(a)(28)

   Investor Q&A (General) (incorporated by reference to the filing under Rule 425 with the SEC by Alcatel Lucent on June 15, 2015)

(a)(29)

   Investor Q&A (Process and Technical) (incorporated by reference to the filing under Rule 425 with the SEC by Alcatel-Lucent on June 15, 2015)

(a)(30)

   Press Release on Early Termination of U.S. Antitrust Waiting Period, dated June 17, 2015 (incorporated by reference to the filing under Rule 425 with the SEC by Alcatel-Lucent on June 17, 2015)

(a)(31)

   Press Release on Q2 2015 Results, dated July 30, 2015 (incorporated by reference to the filing under Rule 425 with the SEC by Alcatel Lucent on July 30, 2015)

(a)(32)

   Press Release on Governance Structure for Proposed Combination, dated July 30, 2015 (incorporated by reference to the filing under Rule 425 with the SEC by Alcatel Lucent on July 30, 2015)

(a)(33)

   Announcement of European Commission Approval of Acquisition, dated July 24, 2015 (incorporated by reference to the filing under Rule 425 with the SEC by Alcatel Lucent on July 30, 2015)

(a)(34)

   Transcript of Q2 2015 Earnings Call (incorporated by reference to the filing under Rule 425 with the SEC by Alcatel Lucent on July 31, 2015)

 

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Exhibit No.

  

Description

(a)(35)

   Transcript of Top 200 Call, dated July 30, 2015 (incorporated by reference to the filing under Rule 425 with the SEC by Alcatel Lucent on July 31, 2015)

(a)(36)

   Announcement of Filing of Form F-4 by Nokia (incorporated by reference to the filing under Rule 425 with the SEC by Alcatel Lucent on August 14, 2015)

(a)(37)

   E-mail Regarding Integration Planning (incorporated by reference to the filing under Rule 425 with the SEC by Alcatel Lucent on August 28, 2015)

(a)(38)

   Nokia Announcement of CFIUS Clearance for Proposed Acquisition of Alcatel Lucent, dated September 14, 2015 (incorporated by reference to the filing under Rule 425 with the SEC by Alcatel Lucent on September 15, 2015)

(a)(39)

   Convertible Bond Q&A (incorporated by reference to the filing under Rule 425 with the SEC by Alcatel Lucent on September 29, 2015)

(a)(40)

   Nokia Announcement of Planned Leadership and Organizational Structure, dated October 7, 2015 (incorporated by reference to the filing under Rule 425 with the SEC by Alcatel Lucent on October 7, 2015)

(a)(41)

   Nokia Announcement of Clearance from China’s Ministry of Commerce for Proposed Acquisition of Alcatel-Lucent, dated October 19, 2015 (incorporated by reference to the filing under Rule 425 with the SEC by Alcatel Lucent on October 20, 2015)

(a)(42)

   Nokia Announcement of Receipt of all Required Regulatory Approvals to Proceed with Filing of its Public Exchange Offer for Alcatel-Lucent, dated October 21, 2015 (incorporated by reference to the filing under Rule 425 with the SEC by Alcatel Lucent on October 21, 2015)

(a)(43)

   Alcatel Lucent’s Board of Directors Issues Favorable Opinion on Public Exchange Offer Filed by Nokia, dated October 29, 2015 (incorporated by reference to the filing under Rule 425 with the SEC by Alcatel Lucent on October 30, 2015)

(a)(44)

   Press Release on Availability of Alcatel Lucent’s response offer document in connection with public exchange offer initiated by Nokia, dated November 12, 2015 (incorporated by reference to the filing under Rule 425 with the SEC by Alcatel Lucent on November 13, 2015)

(a)(45)

   Unofficial English Translation of Alcatel Lucent Offer Response Document, dated October 29, 2015 (incorporated by reference to the filing under Rule 425 with the SEC by Alcatel Lucent on November 16, 2015)

(a)(46)

   Unofficial English Translation of Alcatel Lucent Information Relating in Particular to the Legal, Financial and Accounting Aspects of Alcatel Lucent (Other Information), dated November 17, 2015 (incorporated by reference to the filing under Rule 425 with the SEC by Alcatel Lucent on November 17, 2015)

(a)(47)

   Press Release on Availability of Alcatel Lucent “Other Information” document in connection with public exchange offer initiated by Nokia, dated November 17, 2015 (incorporated by reference to the filing under Rule 425 with the SEC by Alcatel Lucent on November 17, 2015)

(e)(1)

   Memorandum of Understanding, dated April 15, 2015, by and between Alcatel Lucent and Nokia (incorporated by reference to Exhibit 2.1 to the Registration Statement on Form F-4 filed with the SEC by Nokia on August 14, 2015)

(e)(2)

   Amendment to the Memorandum of Understanding, dated October 28, 2015, by and between Alcatel Lucent and Nokia (incorporated by reference to Exhibit 2.2 to Amendment No. 2 to the Registration Statement on Form F-4 filed with the SEC by Nokia on November 6, 2015)

 

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Exhibit No.

  

Description

(e)(3)

   Form of Lock-Up Liquidity Agreement to be entered into by and among Alcatel Lucent, Nokia and some or all of the relevant holders of Alcatel Lucent Stock Options*

(e)(4)

   Form of Lock-Up Liquidity Agreement to be entered into by and among Alcatel Lucent, Nokia and some or all of the relevant beneficiaries of Performance Shares*

(e)(5)

   Form of 2015 Performance Share Plan Liquidity Agreement to be entered into by and among Alcatel Lucent, Nokia and all of the relevant beneficiaries of Performance Shares issued pursuant to the 2015 Performance Share Plan*

(e)(6)

   Form of Underwater Stock Options Liquidity Agreement to be entered into by and among Alcatel Lucent, Nokia and some or all of the relevant holders of Alcatel Lucent Stock Options*

(e)(7)

   Form Stock Option Acceleration Agreement to be entered into by and among Alcatel Lucent and some or all of the relevant beneficiaries of Alcatel Lucent Stock Options*

(e)(8)

   Form of Performance Shares Acceleration Agreement to be entered into by and among Alcatel Lucent and some or all of the relevant beneficiaries of Performance Shares*

(e)(9)

   Form of Replacement Share Grant Notification*

(e)(10)

   2015 Performance Share Plan Rules*

(e)(11)

   Form of 2013 Change of Control Letter*

(e)(12)

   Form of 2006 Change of Control Letter*

(e)(13)

   March 14, 2012 Performance Share Plan for Beneficiary Employees of Non-French Companies (incorporated herein by reference to Exhibit 99.3 filed with the Registration Statement on Form S-8 filed with the SEC by Alcatel Lucent on August 2, 2012 (File No. 333-183016))

(e)(14)

   March 14, 2012 Corporate Stock Subscription Options Plan for Beneficiary Employees of Non-French Companies (incorporated herein by reference to Exhibit 99.1 filed with the Registration Statement on Form S-8 filed with the SEC by Alcatel Lucent on August 2, 2012 (File No. 333-183016))

(e)(15)

   March 14, 2012 Corporate Stock Subscription Options Plan with Performance Conditions for Beneficiary Employees of Non-French Companies (incorporated herein by reference to Exhibit 99.2 filed with the Registration Statement on Form S-8 filed with the SEC by Alcatel Lucent on August 2, 2012 (File No. 333-183016))

(e)(16)

   March 14, 2012 French Corporate Stock Subscription Options Plan*

(e)(17)

   August 13, 2012 Corporate Stock Subscription Options Plan for Beneficiary Employees of Non-French Companies (incorporated herein by reference to Exhibit 99.1 filed with the Registration Statement on Form S-8 filed with the SEC by Alcatel Lucent on March 27, 2013 (File No. 333-187560))

(e)(18)

   August 13, 2012 French Corporate Stock Subscription Options Plan*

(e)(19)

   December 17, 2012 Corporate Stock Subscription Options Plan for Beneficiary Employees of Non-French Companies (incorporated herein by reference to Exhibit 99.2 filed with the Registration Statement on Form S-8 filed with the SEC by Alcatel Lucent on March 27, 2013 (File No. 333-187560))

(e)(20)

   July 12, 2013 Corporate Stock Subscription Options Plan for Beneficiary Employees of Non-French Companies (incorporated herein by reference to Exhibit 99.1 filed with the Registration Statement on Form S-8 filed with the SEC by Alcatel Lucent on December 26, 2013 (File No. 333-193089)

 

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Exhibit No.

  

Description

(e)(21)

   July 12, 2013 French Corporate Stock Subscription Options Plan*

(e)(22)

   July 12, 2013 Performance Share Plan for Beneficiary Employees of Non-French Companies (incorporated herein by reference to Exhibit 99.2 filed with the Registration Statement on Form S-8 filed with the SEC by Alcatel Lucent on December 26, 2013 (File No. 333-193089))

(e)(23)

   July 12, 2013 French Performance Share Plan*

(e)(24)

   September 15, 2014 Performance Share Plan for Employees (incorporated herein by reference to Exhibit 99.1 filed with the Registration Statement on Form S-8 filed with the SEC by Alcatel Lucent on December 18, 2014 (File No. 333-201034))

 

* Filed herewith.

 

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SIGNATURES

After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

 

    ALCATEL LUCENT
Date: November 18, 2015    

By:

 

/s/ Jean Raby

    Name:    Jean Raby
    Title:   Chief Financial and Legal Officer


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ANNEX A

Opinion of Zaoui & Co. S.A., dated April 14, 2015

[Letterhead of Zaoui & Co. S.A.]

April 14, 2015

Board of Directors

Alcatel S.A.

148/152 route de la Reine

92100 Boulogne-Billancourt

FRANCE

Ladies and Gentlemen:

You have requested our opinion as to the fairness from a financial point of view to the holders (other than Nokia Corporation (the “Offeror”) and its affiliates) of the outstanding ordinary shares, par value 0.05 per share (the “Company Shares”), including Company Shares represented by American Depository Shares (“ADSs”), of Alcatel S.A. (the “Company”) of the Exchange Ratio (as defined below) to be paid to such holders pursuant to the Offers (as defined below). The Memorandum of Understanding, dated April 14, 2015 by and between the Offeror and the Company (the “MOU”) contemplates that the Offeror will undertake public exchange offers in France and in the United States (the “Offers”), pursuant to which the Offeror, subject to the satisfaction or waiver of certain conditions set forth in the offers to exchange relating to the Offers, will exchange, for each Company Share (including ADSs) properly tendered and not withdrawn, 0.55 ordinary shares, no par value, of Offeror (the “Offeror Shares)” (the “Exchange Ratio”), as may be adjusted pursuant to the terms of the MOU. We note that the MOU contemplates that the Offeror will, in the Offers, also offer to exchange all OCEANEs, as defined in the MOU, for the Exchange Ratio; we express no opinion as to the fairness from a point of view of the Exchange Ratio to be paid to the holders of the OCEANEs. We note further that the MOU provides that if (i) 95% or more of the Company Shares or Company Securities (as defined in the MOU) and voting rights attached to the Company Shares are owned by the Offeror at the closing of the Offers, the Offeror shall implement a squeeze-out of the remaining Company Shares within three (3) months of Closing the Offers; or (ii) the Offeror own less than 95% or the Company Shares or voting rights attached to the Company Shares at the Closing of the Offers, the Offeror reserves the right to (a) commence a mandatory buy-out of the Company Shares pursuant to Article 236-3 of the AMF General Regulation (as defined in the MOU) if at any time it owns 95% or more of the voting rights attached to the Company Shares, (b) commence at any time a simplified offer for the Company Shares pursuant to Article 233-1 et seq. of the AMF General Regulation (as defined in the MOU), or (c) cause the Company to be merged into the Offeror or an affiliate thereof, contribute assets to, merge certain of its subsidiaries with, or undertake other reorganizations of, the Company. We are not expressing any opinion on any such transaction described in the preceding sentence.

Zaoui & Co. S.A. has acted as financial advisor to the Company in connection with, and has participated in certain of the negotiations leading to, the Offers contemplated by the MOU (the “Transactions”). We expect to receive fees for our services in connection with our engagement, a substantial portion of which is contingent upon consummation of the Transactions, and the Company has agreed to reimburse certain of our expenses arising, and indemnify us against certain liabilities that may arise, out of our engagement. In the two years prior to the date hereof, we have provided financial advisory services to the Company and have received fees in connection with such services. We may also in the future provide financial advisory services to the Company and its affiliates or the Offeror and its affiliates for which we may receive compensation.

 

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In connection with this opinion, we have reviewed, among other things, a draft of the MOU; annual reports to shareholders of the Company and Annual Reports on Form 20-F of the Company for the three fiscal years ended December 31, 2014; annual reports to shareholders of the Offeror and Annual Reports on Form 20-F of the Offeror for the three fiscal years ended December 31, 2014; certain interim reports to shareholders of each of the Company and the Offeror; certain other communications from the Company to its shareholders and from the Offeror to its shareholders; certain publicly available research analyst reports for the Company and the Offeror; certain forecasts for the Company derived from a consensus of selected analysts (the “Company Street Forecasts”); certain forecasts for the Offeror derived from a consensus of selected analysts (the “Offeror Street Forecasts”); and certain operating and financial synergies projected by the management of the Offeror to result from the Transactions (the “Synergies”). We have also participated in discussions with members of the senior managements of the Company and the Offeror regarding their assessment of the strategic rationale for, and the potential benefits of, the Transactions and the past and current business operations, financial condition and future prospects of the Company and the Offeror; reviewed the reported price and trading activity for the Company Shares and Offeror Shares; compared certain financial and stock market information for the Company and the Offeror 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 we deemed appropriate.

For purposes of rendering this opinion, we have, with your consent, 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, us, without assuming any responsibility for independent verification thereof. At your direction, our analysis relating to the business and financial prospects for the Company and for the Offeror for purposes of this opinion has been made on the basis of the Company Street Forecasts and the Offeror Street Forecasts, respectively. We have assumed, with your consent, that the Company Street Forecasts and the Offeror Street Forecasts are a reasonable basis upon which to evaluate the business and financial prospects of the Company and the Offeror, respectively. We express no view as to reasonableness of the Company Street Forecasts or the Offeror Street Forecasts or the assumptions on which they were based, including the selection of the analyst forecasts from which the Company Street Forecasts and the Offeror Street Forecasts were derived, respectively. We have also assumed that the Synergies have been reasonably prepared on a basis reflecting the best currently available estimates and judgments of the management of the Offeror. We have not made any independent evaluation or appraisal of the assets and liabilities (including any contingent, derivative or other off-balance-sheet assets and liabilities) of the Company, the Offeror or any of their respective subsidiaries and we have not been furnished with any such evaluation or appraisal. We have assumed that all governmental, regulatory or other consents and approvals necessary for the consummation of the Transactions will be obtained without any adverse effect on the Company or the Offeror or on the expected benefits of the Transactions in any way meaningful to our analysis. We have assumed that the Transactions will be consummated on the terms set forth in the draft MOU, without the waiver or modification of any term or condition the effect of which would be in any way meaningful to our analysis. We have relied as to all legal matters relevant to rendering our opinion upon the advice of counsel. We do not express any opinion as to any tax or other consequences that may result from the Transactions, nor does our opinion address any legal, tax, regulatory or accounting matters, as to which we understand the Company has received such advice as it deems necessary from qualified professionals.

Our opinion does not address the underlying business decision of the Company to engage in the Transactions, or the relative merits of the Transactions as compared to any strategic alternatives that may be available to the Company. In arriving at our opinion, we were not authorized to conduct a process to solicit, and did not conduct a process to solicit, interest from any third party with respect to any business combination or other extraordinary transaction in each case involving the sale of all or

 

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substantially all of the capital stock and / or assets involving the Company. This opinion addresses only the fairness from a financial point of view to the holders (other than the Offeror and its affiliates) of Company Shares, including ADSs, as of the date hereof, of the Exchange Ratio to be paid to such holders pursuant to the MOU. We do not express any view on, and our opinion does not address, any other term or aspect of the MOU or Transactions or any term or aspect of any other agreement or instrument contemplated by the MOU or entered into or amended in connection with the Transactions, including, the form or structure of the Transactions or the likely timeframe in which the Transactions will be consummated, the fairness of the Transactions 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 the Company; 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 the Company, or class of such persons, in connection with the Transactions, whether relative to the Exchange Ratio to be paid to the holders (other than the Offeror and its affiliates) pursuant to the MOU or otherwise. We are not expressing any opinion as to the prices at which the Offeror Shares will trade at any time or as to the impact of the Transactions on the solvency or viability of the Company or the Offeror or the ability of the Company or the Offeror to pay their respective obligations when they come due. Our opinion is necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to us as of, the date hereof and we assume no responsibility for updating, revising or reaffirming this opinion based on circumstances, developments or events occurring after the date hereof, it being understood that subsequent developments may affect this opinion and the assumptions used in preparing it.

Our advisory services and the opinion expressed herein are provided for the information and assistance of the Board of Directors of the Company in connection with its consideration of the Transactions and may not be used for any other purpose without our prior written consent, except that a copy of this opinion may be included in its entirety in any filing the Company or the Offeror is required to make in connection with the Transactions if such inclusion is expressly required by applicable law. In addition, this opinion does not constitute a recommendation as to whether any holder of Company Shares, including ADSs, should tender their shares into the Offers or as to any other matter.

Based upon and subject to the foregoing, it is our opinion that, as of the date hereof, the Exchange Ratio to be paid to the holders (other than the Offeror and its affiliates) of Company Shares, including ADSs, pursuant to the Offers is fair from a financial point of view to such holders.

 

Very truly yours,

/s/ Yoël Zaoui

Yoël Zaoui
ZAOUI & CO. S.A.

 

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ANNEX B

Opinion of Zaoui & Co. S.A., dated October 28, 2015

[Letterhead of Zaoui & Co. S.A.]

October 28, 2015

Board of Directors

Alcatel S.A.

148/152 route de la Reine

92100 Boulogne-Billancourt

FRANCE

Ladies and Gentlemen:

You have requested an update of our opinion, initially delivered on April 14, 2015, as to the fairness from a financial point of view to the holders (other than Nokia Corporation (the “Offeror”) and its affiliates) of the outstanding ordinary shares, par value 0.05 per share (the “Company Shares”), including Company Shares represented by American Depository Shares (“ADSs”), of Alcatel S.A. (the “Company”) of the Exchange Ratio (as defined below) to be paid to such holders pursuant to the Offers (as defined below). The Memorandum of Understanding, dated April 14, 2015 by and between the Offeror and the Company (the “MOU”) contemplates that the Offeror will undertake public exchange offers in France and in the United States (the “Offers”), pursuant to which the Offeror, subject to the satisfaction or waiver of certain conditions set forth in the offers to exchange relating to the Offers, will exchange, for each Company Share (including ADSs) properly tendered and not withdrawn, 0.55 ordinary shares, no par value, of Offeror (the “Offeror Shares)” (the “Exchange Ratio”), as may be adjusted pursuant to the terms of the MOU. We note that the MOU contemplates that the Offeror will, in the Offers, also offer to exchange all OCEANEs, as defined in the MOU, for the Exchange Ratio; we express no opinion as to the fairness from a point of view of the Exchange Ratio to be paid to the holders of the OCEANEs. We note further that the MOU provides that if (i) 95% or more of the Company Shares or Company Securities (as defined in the MOU) and voting rights attached to the Company Shares are owned by the Offeror at the closing of the Offers, the Offeror shall implement a squeeze-out of the remaining Company Shares within three (3) months of Closing the Offers; or (ii) the Offeror own less than 95% or the Company Shares or voting rights attached to the Company Shares at the Closing of the Offers, the Offeror reserves the right to (a) commence a mandatory buy-out of the Company Shares pursuant to Article 236-3 of the AMF General Regulation (as defined in the MOU) if at any time it owns 95% or more of the voting rights attached to the Company Shares, (b) commence at any time a simplified offer for the Company Shares pursuant to Article 233-1 et seq. of the AMF General Regulation (as defined in the MOU), or (c) cause the Company to be merged into the Offeror or an affiliate thereof, contribute assets to, merge certain of its subsidiaries with, or undertake other reorganizations of, the Company. We are not expressing any opinion on any such transaction described in the preceding sentence.

Zaoui & Co. S.A. has acted as financial advisor to the Company in connection with, and has participated in certain of the negotiations leading to, the Offers contemplated by the MOU (the “Transactions”). We expect to receive fees for our services in connection with our engagement, a substantial portion of which is contingent upon consummation of the Transactions, and the Company has agreed to reimburse certain of our expenses arising, and indemnify us against certain liabilities that may arise, out of our engagement. In the two years prior to the date hereof, we have provided financial advisory services to the Company and have received fees in connection with such services. We may also in the future provide financial advisory services to the Company and its affiliates or the Offeror and its affiliates for which we may receive compensation.

 

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In connection with this updated opinion, we have reviewed, among other things, the MOU; annual reports to shareholders of the Company and Annual Reports on Form 20-F of the Company for the three fiscal years ended December 31, 2014; annual reports to shareholders of the Offeror and Annual Reports on Form 20-F of the Offeror for the three fiscal years ended December 31, 2014; certain interim reports to shareholders of each of the Company and the Offeror; certain other communications from the Company to its shareholders and from the Offeror to its shareholders; certain publicly available research analyst reports for the Company and the Offeror published prior to April 13, 2015; certain forecasts for the Company derived from a consensus of selected analysts published after announcement of the Transactions and available as of October 27, 2015 (the “Updated Company Street Forecasts”); certain forecasts for the Offeror derived from a consensus of selected analysts published after announcement of the Transactions and available as of October 27, 2015 (the “Updated Offeror Street Forecasts”); and certain operating and financial synergies projected by the management of the Offeror to result from the Transactions (the “Synergies”). We have also participated in discussions with members of the senior managements of the Company and the Offeror regarding their assessment of the strategic rationale for, and the potential benefits of, the Transactions and the past and current business operations, financial condition and future prospects of the Company and the Offeror; reviewed the reported price and trading activity for the Company Shares and Offeror Shares as it existed on or before April 13, 2015; compared certain financial and stock market information for the Company and the Offeror available as of October 27, 2015 with similar information available as of October 27, 2015 for certain other companies the securities of which are publicly traded; reviewed the financial terms of certain comparable business combinations announced prior to April 13, 2015; and performed such other studies and analyses, and considered such other factors, as we deemed appropriate.

For purposes of rendering this opinion, we have, with your consent, 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, us, without assuming any responsibility for independent verification thereof. At your direction, our analysis relating to the business and financial prospects for the Company and for the Offeror for purposes of this opinion has been made on the basis of the Updated Company Street Forecasts and the Updated Offeror Street Forecasts, respectively. We have assumed, with your consent, that the Updated Company Street Forecasts and the Updated Offeror Street Forecasts are a reasonable basis upon which to evaluate the business and financial prospects of the Company and the Offeror, respectively. We express no view as to reasonableness of the Updated Company Street Forecasts or the Updated Offeror Street Forecasts or the assumptions on which they were based, including the selection of the analyst forecasts from which the Updated Company Street Forecasts and the Updated Offeror Street Forecasts were derived, respectively. We have also assumed that the Synergies have been reasonably prepared on a basis reflecting the best currently available estimates and judgments of the management of the Offeror. To the extent that an analysis is based on market data for the Company and the Offeror, we determined it was not relevant to include any market data that became available after April 14, 2015, the date on which we orally delivered our original opinion to the Board of Directors of the Company, as the trading prices of the Company Shares and the Offeror Shares were thereafter impacted by the announcement of the Transactions. We have not made any independent evaluation or appraisal of the assets and liabilities (including any contingent, derivative or other off-balance-sheet assets and liabilities) of the Company, the Offeror or any of their respective subsidiaries and we have not been furnished with any such evaluation or appraisal. We have assumed that all governmental, regulatory or other consents and approvals necessary for the consummation of the Transactions will be obtained without any adverse effect on the Company or the Offeror or on the expected benefits of the Transactions in any way meaningful to our analysis. We have assumed that the Transactions will be consummated on the terms set forth in the MOU, without the waiver or modification of any term or condition the effect of which would be in any way meaningful to our analysis. We have relied as to all legal matters relevant to rendering our opinion upon the advice of counsel. We do not express any opinion as to any tax or other

 

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consequences that may result from the Transactions, nor does our opinion address any legal, tax, regulatory or accounting matters, as to which we understand the Company has received such advice as it deems necessary from qualified professionals.

Our opinion does not address the underlying business decision of the Company to engage in the Transactions, or the relative merits of the Transactions as compared to any strategic alternatives that may be available to the Company, or the decision of the Board of Directors of the Company to recommend the Transactions to holders of Company Shares. In arriving at our opinion, we were not authorized to conduct a process to solicit, and did not conduct a process to solicit, interest from any 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 capital stock and / or assets involving the Company. This opinion addresses only the fairness from a financial point of view to the holders (other than the Offeror and its affiliates) of Company Shares, including ADSs, as of the date hereof, of the Exchange Ratio to be paid to such holders pursuant to the MOU. We do not express any view on, and our opinion does not address, any other term or aspect of the MOU or Transactions or any term or aspect of any other agreement or instrument contemplated by the MOU or entered into or amended in connection with the Transactions, including, the form or structure of the Transactions or the likely timeframe in which the Transactions will be consummated, the fairness of the Transactions 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 the Company; 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 the Company, or class of such persons, in connection with the Transactions, whether relative to the Exchange Ratio to be paid to the holders (other than the Offeror and its affiliates) pursuant to the MOU or otherwise. We are not expressing any opinion as to the prices at which the Offeror Shares will trade at any time or as to the impact of the Transactions on the solvency or viability of the Company or the Offeror or the ability of the Company or the Offeror to pay their respective obligations when they come due. Except as otherwise stated herein, our opinion is necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to us as of, the date hereof, and we assume no responsibility for updating, revising or reaffirming this opinion based on circumstances, developments or events occurring after the date hereof, it being understood that subsequent developments may affect this opinion and the assumptions used in preparing it.

Our advisory services and the opinion expressed herein are provided for the information and assistance of the Board of Directors of the Company in connection with its consideration of whether to recommend the Transactions to holders of Company Shares and may not be used for any other purpose without our prior written consent, except that a copy of this opinion may be included in its entirety in any filing the Company or the Offeror is required to make in connection with the Transactions if such inclusion is expressly required by applicable law. In addition, this opinion does not constitute a recommendation as to whether any holder of Company Shares, including ADSs, should tender their shares into the Offers or as to any other matter.

Based upon and subject to the foregoing, it is our opinion that, as of the date hereof, the Exchange Ratio to be paid to the holders (other than the Offeror and its affiliates) of Company Shares, including ADSs, pursuant to the Offers is fair from a financial point of view to such holders.

 

Very truly yours,

/s/ Yoël Zaoui

Yoël Zaoui
ZAOUI & CO. S.A.

 

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ANNEX C

Unofficial English Translations of Independent Expert Report of Associés en Finance, dated October 28, 2015, and Addendum, dated November 9, 2015

Important Note: The following Independent Expert Report of Associés en Finance, dated October 28, 2015, and Addendum, dated November 9, 2015, are unofficial English translations of the original French versions and have been prepared for informational purposes only. In the event of any inconsistency between the English and French versions, the French versions shall prevail.

 

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LOGO

Fairness opinion by Associés en Finance on Nokia’s public exchange offer for all securities issued by Alcatel Lucent

28 October 2015

 

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Contents

 

I.   Assignment and resources      C-5   
II.   Alcatel-Lucent and Nokia: presentation, analysis and strategy      C-7   
  A.    Brief history and general characteristics of the two groups      C-8   
  B.    Description of activities      C-12   
  C.    The two group’s main financial data: growth, margins and financial position      C-16   
  D.    Fundamentals: the two companies’ operating and technological environment and their strengths and weaknesses      C-23   
III.   Valuation: examination of the terms and conditions of the offer and fairness of the exchange ratio applied to the shares      C-27   
  A.    Examination of the share price performance of Alcatel-Lucent, Nokia and the exchange ratio implied by share prices      C-27   
  B.    Valuation methods set aside      C-34   
  C.    Methods examined      C-35   
     1.    Coverage of both companies by investment analysts and price targets (for guidance purposes)      C-37   
     2.    Analysis of any recent transactions in the two groups’ capital (for reference purposes)      C-37   
     3.    Discounted cash flow method: DCF to firm and DCF to equity approaches      C-37   
     4.    Parameters used to value the companies      C-38   
        a)    Preparation of projections      C-38   
        b)    Examination of agreements related to the public exchange offer and outcome of the offer      C-39   
        c)    Determination of the number of shares excluding offer-related effects      C-42   
        d)    Adjustments used to arrive at equity value from enterprise value      C-42   
     5.    How the projected cash flows were discounted : DCF to firm and DCF to equity approaches      C-43   
        a)    Discount rate applied to projected cash flows      C-43   
        b)    Results of the intrinsic standalone valuation of Alcatel-Lucent and Nokia based on the long-term projections prepared by Associés en Finance and the implied exchange ratio resulting therefrom      C-45   
        c)    Impact of how the offer is implemented      C-46   
        d)    Potential effect of synergies      C-47   
     6.    Peer comparison      C-47   
     7.    Comparable industry transaction method (considered, but not used)      C-50   
     8.    Sum-of-the-parts valuation (for indicative purposes only)      C-51   
     9.    Summary of the exchange ratios obtained      C-52   

 

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IV.   Analysis of the work performed by the sponsoring bank on assessing the exchange ratio between the two shares      C-52   
  A.   Valuation method      C-52   
  B.   Evaluation of the exchange ratio by the sponsoring bank and comparison with Associés en Finance’s analysis      C-53   
    1.   Analysis of the exchange ratio based on pre-offer share prices      C-53   
    2.   Exchange ratio implied by brokers’ price targets before the offer was announced      C-54   
    3.   Details of the transition between enterprise value and equity value      C-54   
    4.   Exchange ratio implied by peer comparison valuations      C-55   
    5.   Exchange ratio implied by DCF valuations      C-56   
  C.   Comparison of the results of the analysis by the sponsoring bank with that prepared by Associés en Finance      C-57   
V.   Analysis of the offer for the OCEANE bonds      C-57   
  A.   Characteristics of the OCEANE bonds and impact on the allotment ratio      C-58   
  B.   Analysis of the prices of the OCEANE bonds      C-60   
  C.   Valuation of the OCEANE bonds prior to announcement of the offer      C-63   
    1.   Intrinsic valuation at 9 april 2015      C-63   
    2.   Analysis of the offer at 9 April 2015      C-66   
  D.   Options open to OCEANE bondholders at the time of the offer      C-67   
    1.   Tender OCEANE bonds to the public exchange offer in return for Nokia shares      C-68   
    2.   Request allotment of Alcatel-Lucent shares, then tender these shares to the public exchange offer      C-68   
    3.   Request allotment of Alcatel-Lucent shares, then retention of the shares, or sale of the shares      C-69   
    4.   Hold onto the OCEANE bonds      C-69   
  E.   Valuation of the OCEANE bonds at the time of the offer      C-71   
  F.   Analysis of the appraisal of the terms and conditions of the offer for the OCEANE bonds presented by the bank sponsoring the offer      C-74   
  G.   Conclusion of the analysis of the offer for the OCEANE bonds (at 23 October 2015)      C-75   
VI.   Associés en Finance’s conclusion      C-76   
Appendix 1:   Presentation of the appraiser      C-78   
Appendix 2:   Performance of the assignment      C-81   
Appendix 3:   Detailed information on comparable companies      C-83   
Appendix 4:   Details of past transactions in the sector      C-85   
Appendix 5:   analysis of possible scenarios if OCEANEs are retained after the public exchange offer      C-90   
Appendix 6:   Detailed presentation of Associés en Finance’s Trival® model      C-92   

 

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  Assignment and resources

Context

Nokia and Alcatel-Lucent, two leading European telecom manufacturers, started discussions in 2013 with a view to combining some of their activities. Those discussions gained speed in early 2015, when a plan for a full combination of the two companies was considered, to create a financially solid European group that is a leading player in its market. Negotiations between the two groups focused on a combination through a public exchange offer, and the exchange terms were increased in favour of Alcatel-Lucent shareholders as the discussions progressed, resulting in the terms presented in the present exchange offer.

On 14 April 2015, following movements in Alcatel-Lucent’s share price and market rumours about plans involving the two groups, an initial press release was published mentioning discussions between Nokia and Alcatel-Lucent about Nokia acquiring the whole of Alcatel-Lucent. On 15 April 2015, a press release announcing the planned public exchange offer and its main terms was published. The public exchange offer (hereinafter “offer” or “public exchange offer”) is for all securities issued or to be issued by Alcatel-Lucent, including the three issues of OCEANEs maturing in 2018, 2019 and 2020. The press release states that Nokia will make an offer for those OCEANEs that is equivalent to the offer for ordinary shares. After the transaction, Alcatel-Lucent shareholders would own around 33.5% of the new group’s fully diluted capital, and Nokia shareholders around 66.5%, assuming a 100% tender rate.

Nokia has also announced its intention to carry out a squeeze-out on Alcatel-Lucent’s shares after the offer, if it has at least 95% of Alcatel-Lucent’s capital and voting rights. On the other hand, if Nokia does not obtain at least 50% of Alcatel-Lucent’s fully diluted capital after the offer, the offer will lapse, although Nokia reserves the right to waive that 50% threshold1.

Associés en Finance’s assignment

Alcatel-Lucent’s Board of Directors has appointed Associés en Finance2 as an independent appraiser under article 261-1 I of the Autorité des Marchés Financiers’ General Regulation, which states that a company that is the object of a public offer must appoint an independent appraiser where that offer is capable of generating conflicts of interest within its board of directors, its supervisory board or governing body, so as to potentially affect the objectivity of the reasoned opinion that the governing body must provide on the proposed offer. Associés en Finance’s assignment falls specifically within paragraph 5 of article 261-1 I of the AMF’s General Regulation, which requires an independent appraiser to be used “if the offer pertains to financial instruments in multiple categories and is priced in a way that could jeopardise the fair treatment of shareholders or bearers of the financial instruments

 

1  As indicated in the French offer document, the minimum acceptance threshold (50%) shall be calculated as follows: the numerator includes (i) all Shares validly tendered into the Offer and into the U.S. Offer (including Shares represented by ADSs) on the closing date of the last of the two Offers, (ii) all Shares issuable upon conversion of the OCEANEs validly tendered into the Offer and into the U.S. Offer on the closing date of the last of the two Offers, taking into account the conversion ratio applicable on the closing date of such Offers; the denominator includes (i) all Shares issued and outstanding (including Shares represented by ADSs) on the closing date of the last of the two Offers and (ii) all Shares issuable at any time prior to, on or after the closing date of the last of the two Offers upon exercise of any outstanding options, warrant, convertible securities or rights to purchase, subscribe or be allocated, newly issued Shares, including upon conversion of the OCEANEs (taking into account the conversion ratio applicable on the closing date of such Offers), exercise of Stock Options or acquisition of Performance Shares.
2  Associés en Finance and Détroyat Associés merged in late 2014 to form “Associés en Finance, Jacquillat et Détroyat Associés”. Its trading name is “Associés en Finance”, sometimes referred to in this document using the acronym “AEF”.

 

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targeted by the bid”, and paragraph 2, which refers to the conflict of interest that may arise if the management of the target company or persons that control it have formed an agreement with the offer or that is capable of affecting their independence.

Associés en Finance’s assignment is to produce a fairness opinion on the exchange ratios offered in Nokia’s public exchange offer for all securities issued by Alcatel Lucent. The exchange ratios are 0.5500 Nokia shares for each Alcatel-Lucent share, 0.6930 Nokia shares for each Alcatel-Lucent OCEANE 2018, 0.7040 Nokia shares for each Alcatel-Lucent OCEANE 2019 and 0.7040 Nokia shares for each Alcatel-Lucent OCEANE 20203.

The Associés en Finance people involved in this assignment are Bertrand Jacquillat, honorary chairman of Associés en Finance and assignment leader, Arnaud Jacquillat, CEO, Catherine Meyer, Partner, Julien Bianciotto, Pierre Charmion, Laurent Sitri and Viet Do-Quy, financial analysts. Philippe Leroy, Chairman of the Board of Directors, is in charge of quality control.

Independence

Associés en Finance and Détroyat Associés, along with Associés en Finance in its new configuration since the two entities merged, confirm that they have no conflicts of interest and are independent from all participants in this transaction within the meaning of article 261-4 of the AMF General Regulation and instruction 2006-08 of 25 July 2006 relating to independent appraisals.

Accordingly, Associés en Finance, Détroyat Associés and their employees:

 

    Have no legal or capital links with the companies concerned by the Offer or with their advisors so as to affect their independence;

 

    Have not carried out any assessment on behalf of Alcatel-Lucent or Nokia in the last 18 months;

 

    Have not advised Alcatel-Lucent or Nokia or any entity that those companies control within the meaning of article L.233-3 of the French Commercial Code in the last 18 months;

 

    Have no financial interest in the success of the Offer, are not owed any debt by or owe any debt to any company concerned by the Offer so as to affect their independence;

 

    Do not maintain any repeated relations with any bank so as to affect the independence of Associés en Finance. In particular, neither Associés en Finance nor Détroyat Associés have taken part in independent appraisal assignments in which Société Générale was the sponsoring bank in the last 18 months.

 

    Have not been given any assignment – other than the present assignment – by the companies concerned by the Offer with respect to the coming months.

For transparency purposes, Associés en Finance states that in the first half of 2014 it indirectly contributed to a research assignment for Alcatel-Lucent. The work consisted of researching academic literature and reviewing broker notes, and did not involve any advisory activity. The remuneration of that work represented less than 5% of Associés en Finance’s revenue. Associés en Finance believes that it fulfils the independence criteria required to perform this assignment.

Disclaimer

The information used in performing our work was either provided by Alcatel-Lucent, Nokia and their advisors, or was public.

 

3  Nokia’s Tender Offer on Alcatel-Lucent’s shares and OCEANE bonds is made with four fractional digits exchange ratios.

 

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To the extent that the business plans used internally by Alcatel-Lucent and Nokia are confidential, Associés en Finance’s valuation work used forecast data taken from market consensus forecasts and its own estimates, extrapolated over the long term by methods habitually used as part of the Trival valuation method. The forward-looking assumptions made by Associés en Finance in its valuations were compared with information from Alcatel-Lucent’s 2015 budget, and with information obtained from meetings with Alcatel-Lucent’s management.

Alcatel-Lucent and Nokia certified to us that there were no agreements connected with the present offer between the various entities, the two companies’ management teams or minority shareholders that could have an impact on the offer exchange ratios, other than those mentioned in this report. Nokia has also certified that it has not acquired any Alcatel-Lucent shares in the last 12 months.

Alcatel-Lucent’s Board of Directors has decided to offer group employees who hold stock options and performance shares the opportunity to monetise in certain cases those instruments as part of Nokia’s public exchange offer. Accordingly, a system has been set up to reduce the lock-up period of any shares resulting from these deferred remuneration methods. Arrangements have also been made for the CEO. These arrangements are described later in this document.

Associés en Finance has not carried out any physical review nor any independent assessment of the non-current assets, other assets or liabilities of Alcatel-Lucent and Nokia or those of their subsidiaries and affiliates. Associés en Finance has not carried out any independent review of current or potential litigation, claims or other potential liabilities that the companies have or may have. In general, data, documents or information sent to or accessed by Associés en Finance has been assumed to be accurate without independent checking, and Associés en Finance shall not bear any liability in relation to those data, documents and information. Associés en Finance cannot guarantee the accuracy of forecasts, estimates or information provided.

This appraisal report and its conclusion about the fairness of the Offer’s financial terms for the Company’s shareholders and OCEANE holders do not represent a recommendation for Alcatel-Lucent shareholders or OCEANE holders regarding the way in which they should act in respect of the Offer.

Performance of Associés en Finance’s assignment

Associés en Finance was appointed by Alcatel-Lucent’s Board of Directors on 4 June 2015. Associés en Finance’s assignment took place between 15 June 2015 and 28 October 2015. The present report is based on 23 October 2015 market prices.

During that period, Associés en Finance had regular contact in person and by telephone with the various people listed in Appendix 2.

The detailed work schedule and information sources used are also set out in Appendix 2. In performing its assignment, Associés en Finance used its own methods and databases (Trival model), along with meetings and various sources of available information.

 

  Alcatel-Lucent and Nokia: presentation, analysis and strategy

Assessing the fairness of Nokia’s public exchange offer for Alcatel-Lucent requires us to form an opinion on the proposed exchange ratios between the Nokia shares offered and the Alcatel-Lucent shares and OCEANEs to be acquired. This involves assessing the two companies and valuing the Nokia shares and the Alcatel-Lucent shares and OCEANEs. These values depend on contractual factors, particularly in the case of the Alcatel-Lucent OCEANEs, but above all on the economic and financial prospects of the two companies on a stand-alone basis. These economic and financial

 

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prospects are influenced by the industrial and technological context in which the two companies operate. That context involves regular technological disruption, as shown by both companies’ history and the description of their act