Under the all-share deal, Alcatel-Lucent shareholders will own 33.5% of the new combined firm, and Nokia shareholders 66.5%.
Both firms said their boards had agreed the takeover and they expected it to go through in the first half of next year.
The merger will form  a European telecoms equipment group worth more than €40bn (£29bn).
Nokia says it has agreed to buy smaller French rival Alcatel-Lucent in a €15.6bn takeover deal.