Alcatel, Lucent Merge For $13.4 Billion

    April 3, 2006
    WebProNews Staff

The French communications hardware maker Alcatel will mercifully end Lucent Technologies unfulfilled expectations and position the company to better face Cisco in the marketplace.

Alcatel ((ADR) NYSE:ALA) and Lucent (NYSE:LU) announced their merger, which will form a combined company with a market cap of about $36 billion.

A fixed exchange ratio of 0.1952 will be the centerpiece of the stock-for-stock merger, the companies said in a presentation. That will give Lucent shareholders about $3.01 worth of Alcatel American Depository Shares for each share of Lucent, which closed Friday at $3.05.

Lucent CEO Patricia Russo will move to Paris to be the CEO of the merged firm, with current Alcatel CEO Serge Tchuruk taking the position of non-executive chairman of the board. The new board will have six current directors each from Lucent and Alcatel (including Russo and Tchuruk); they will mutually choose two new independent European directors.

The company plans to eliminate ten percent of its combined workforce after the merger, reportedly as many as 8,800 people. Also, Alcatel will form a separate, US-based independent subsidiary to allow it to compete for certain US government contracts. Alcatel plans to have that company managed by a three-member board of US citizens “acceptable to the US government.”

Alcatel expects collective revenues from the merger to reach almost $25 billion based on both companies 2005 performance. They also expect to enjoy a competitive benefit from the merging of the two firms research and development teams. Lucent’s main base of Murray Hill, New Jersey, for Bell Labs will remain its US headquarters.

Among their technology developments, Alcatel believes this will strengthen their Triple Play/IPTV deployments of over 40 projects and more than 20 commercial live networks. This also leads into Quadruple Play services that introduce mobile television to the mix.

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David Utter is a staff writer for WebProNews covering technology and business.