Super Bullish, glad to see support for the deal.

A snippet from their report:

 

Deal synergy deep dive – €900m target too conservative

In this note we analyse potential revenue synergies, dis-synergies and cost savings

opportunities from the announced Alcatel acquisition. Based on our analysis, we

conclude that Nokia may eventually be able to deliver up to twice its current synergy

target. We estimate cost savings could be >€2bn mostly in wireless R&D, Opex

efficiencies from regional overlap and COGS savings from larger procurement scale

and manufacturing. We estimate €0.3bn in revenue synergies and c. €0.6bn in dissynergies,

driving potential NET synergies of €1.8bn. These would be worth c.

€3.2/share and with the stock in our view only discounting pro forma net cash and

PRE Synergy Networks margins currently, we continue to see an attractive ‘deep

value’/risk reward opportunity. We maintain our 12-month €9.3 PO, and also our

base case scenario for the deal, in which Nokia delivers its synergy target, implying

a theoretical fair value of €11.5 in 2018, discounted back. BUY.

 

Achieving twice the synergies could give significant upside

According to our scenario analysis (see inside), if Nokia is able to deliver twice its

synergy target ie €1.8bn, generating €0.83 in 2019E EPS power for the combined

entity, we estimate a valuation of €14 in 2018.

 

Deal synergies & IPR not in the price

Based on our SOTP analysis we believe the current share price is only discounting

net cash (€1.9/share assuming HERE disposal for €2.5bn) and pre-synergy

Networks margins (8.5% margins/0.85x sales= €4.1/share). It appears that the

market has no value ascribed to deal synergies (base case €1.5/share, bull case

€3.2/share) and IPR/Technologies. We view the current share price as a ‘deep

value’/risk reward opportunity.