Alcatel And Lucent To Merge
Alcatel And Lucent To Merge
April 4th, 2006: Telecommunications giants Alcatel and Lucent have announced an agreement to merge in a U.S.$13.4 billion stock deal, creating the second-largest ICT company in the world.
The merger will create a U.S.$33 billion company, with Paris-based Alcatel holding 60% of the newly formed communications colossus, while U.S. based Lucent will take the remaining 40%.
The new company will constitute the world’s second-largest Information and Communications Technology (ICT) maker after Cisco. At U.S.$25 billion combined, they already have a turnover larger than Cisco’s.
Analysts say that the partnership will be better equipped to deal with increasing competition in the telecommunication market as more and more telecommunication providers consolidate. In a joint statement, the two companies say that the primary reason for the merger is to attack market opportunities in next-generation networks, services and applications.
“The key objective of this merger is to generate significant growth in revenue and results, by exploiting market opportunities in new generation networks, services and applications, while also carrying out important synergies,” they say.
Alcatel and Lucent also say that merger is expected to bring about the cutting of around 10%, or 8,800 people from their combined workforce.
Alcatel and Lucent have tried to merge in 2001, however talks then ended without agreement. This time around a U.S.$500 million compensation payment clause has been written in to the agreement to prevent any last minute wedding jitters.
The deal has been labelled a “merger of equals” and is subject to approval by regulators. Both companies will have equal representation on the new company’s management board. The name of the new company is yet to be announced.
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