Nokia has announced it is to buy telecoms equipment company Alcatel-Lucent for €15.6bn.
The deal is subject to approval by Nokia's shareholders and other paperwork, but if it goes through it will lay the foundation for what the company calls "the next wave of technological change, including the internet of things (IoT) and transition to the cloud".
Together, Nokia and Alcatel-Lucent boast more than 40,000 R&D employees. Both firms spent a combined €4.7bn on R&D in 2014.
In a statement, Rajeev Suri, president and CEO of Nokia, said: "Together, Alcatel-Lucent and Nokia intend to lead in next-generation network technology and services, with the scope to create seamless connectivity for people and things wherever they are.
"Our innovation capability will be extraordinary, bringing together the R&D engine of Nokia with that of Alcatel-Lucent and its iconic Bell Labs. We will continue to combine this strength with the highly efficient, lean operations needed to compete on a global scale."
When the transaction is completed, Nokia has said it intends to establish a €100m investment fund to invest in start-ups in France with a focus on IoT and the industrial internet.