Alcatel to acquire Lucent

Alcatel and Lucent Technologies have entered into a definitive merger agreement to create a global communications solutions provider with a broad wireless, wireline and services portfolio.

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By  Angela Sutherland Published  April 3, 2006

Alcatel and Lucent Technologies have entered into a definitive merger agreement to create a global communications solutions provider with a broad wireless, wireline and services portfolio. The two vendors say the primary driver of the combination is to generate significant growth in revenues and earnings based on the market opportunities for next-generation networks, services and applications, while yielding significant synergies. The transaction, which was approved by the boards of directors of both companies, will build upon the complementary strengths of each company to create a global leader in the transformation of next-generation wireless, wireline and converged networks. “This combination is about a strategic fit between two experienced and well-respected global communications leaders who together will become the global leader in convergence,” says Serge Tchuruk, chairman and CEO of Alcatel who will become non-executive chairman of the combined company. “A combined Alcatel and Lucent will be global in scale, have clear leadership in the areas that will define next-generation networks, boast one of the largest research and development capabilities focused on communications, and employ the largest and most experienced global services team in the industry. It will create enhanced value for shareholders of both companies who will benefit from owning the most dynamic, global player in the communications industry.” Patricia Russo, chairman and CEO of Lucent who will become CEO of the combined company says: “The strategic logic driving this transaction is compelling. The communications industry is at the beginning of a significant transformation of network technologies, applications and services -- one that is projected to enable converged services across service-provider networks, enterprise networks and an array of personal devices.” Russo says the move presents extraordinary opportunities for the new entity to accelerate its growth. The combination creates a new industry competitor with the most comprehensive portfolio that will be poised to deliver significant benefits to customers, shareowners and employees. The combined company, which will be named at a later date, will have an aggregate market capitalisation of approximately $US36 billion. Under the terms of the agreement, Lucent shareowners will receive 0.1952 of an ADS (American Depositary Share) representing ordinary shares of Alcatel (as the combined company) for every common share of Lucent that they currently hold. Upon completion of the merger, Alcatel shareholders will own approximately 60% of the combined company and Lucent shareholders will own approximately 40% of the combined company. The combined company’s ordinary shares will continue to be traded on the Euronext Paris and the ADSs representing ordinary shares will continue to be traded on the New York Stock Exchange.

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