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Lucent / Alcatel merger talks collapse

The multi-billion dollar deal that could have linked two of the world's biggest telecom equipment companies has been scrapped after a disagreement over terms.

Alcatel’s proposed US $23 billion dollar deal with Lucent has been scrapped.

American telecom equipment maker Lucent called off talks late on Tuesday night after balking at the idea of being taken over by the French company as opposed to being an equal partner in a merger.

"Even if they could have agreed to get together, there would have been all sorts of political problems from the U.S. side, so if it's going to fail, it's best it does so early on," David Thwaites, European equity strategist at BNP Paribas, told Reuters.

The most obvious "political problem" is the work Lucent’s R&D arm, Bell Labs, does for the American government.

It is highly unlikely that the Whitehouse would have approved of a foreign company being so closely involved, which could have led to the deal being blocked anyway.

Lucent was looking for financial security after losing $4.7 billion in the first half of this year.

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