Alcatel, Lucent deal close

May 28, 2001
Web posted at: 1103 GMT

LONDON (CNN) -- Alcatel, Europe's No. 4 telecom equipment maker, may announce the acquisition of Lucent Technologies on Wednesday, a report said on Monday.

The deal is worth about $32 billion (37.25 billion) in stock, the Wall Street Journal reported. The two companies met over the weekend and a deal could be presented to the boards for final approval on Tuesday.

France's Alcatel is expected to acquire Lucent (LU: Research, Estimates) for little or no premium over its current stock price, the paper said. However, talks could founder if Alcatel's share price continues slide.

The new combined company would be based in the U.S. and meetings over the weekend discussed adopting a new name, instead of Alcatel or Lucent.

Among the key factors driving any merger is the $4 billion in annual cost savings projected by the companies, the WSJ said.

Alcatel wants to buy Lucent to break into the lucrative U.S. market, the world's biggest for telephone switches, fiber optics and Internet routers.

Murray Hill, N.J.-based Lucent, one of the most widely held U.S. stocks, and its rivals Nortel Networks (NT: Research, Estimates) and Cisco Systems (CSCO: Research, Estimates) dominate the industry.

Lucent has lagged behind competitors in the key optical equipment markets over the last few years and found itself saddled with manufacturing constraints and declining demand for its core telephone products.

Those problems led to the ouster last October of Chief Executive Richard McGinn, who was replaced with former Chief Executive Henry Schacht.

The company has lowered earnings guidance several times since then. On May 7, Lucent fired Chief Financial Officer Deborah Hopkins barely a year after wooing her away from Boeing (BA: Research, Estimates). Some reports suggested Hopkins and Schacht had been at odds.

In Paris on Friday, shares in Alcatel (PCGE) fell 6.9 percent to close at 31.95, valuing the company at about $34.5 billion. Lucent shares lost 1.4 percent to close at $9.40 in New York trading on Friday.

Alcatel to buy Lucent for $40 billion - May 18, 2001
Lucent
Alcatel

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