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Summary:

Alcatel and Lucent Technologies have finally decided to tie the knot and merge their two companies, in what amounts to be a gigantic first step in the telecom hardware consolidation. The combined company will have a market capitalization of $36 billion, and will have sales of […]

Alcatel and Lucent Technologies have finally decided to tie the knot and merge their two companies, in what amounts to be a gigantic first step in the telecom hardware consolidation. The combined company will have a market capitalization of $36 billion, and will have sales of around $25 billion and will have 88,000 employees. This is not really a merger of equals, and if you read the terms of the deal, its Alcatel swallowing Lucent.

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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 percent of the combined company and Lucent shareholders will own approximately 40 percent of the combined company.

Serge Tchuruk, chairman and CEO of Alcatel who will become non-executive chairman of the combined company and Patricia Russo, the chair(wo)man and CEO of Lucent will become CEO of the combined company. There are two compelling reasons for this deal – the carriers desire for IMS, the technology that would let them merge the wireline and wireless networks. Lucent has done great work in that space, and the combined company will do well because of that. In addition, it solves Tchuruk’s transition dilemma. He did not have a #2 and with his time was running out – well you know how it is!

  1. “I do” = “Je le veux” :)

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  2. Looks like Russo will be the CEO of the combined company and she does not know a word of French :D

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  3. Good posting, Om. I just read a transcript of the Alcaltel-Lucent merger announcement here: http://seekingalpha.com/article/8499

    Serge Tchuruk, Alcatel’s Chairman, answered his own rhetorical question on the call as to why these two behemoths should merge:

    “The first key, to be amongst the best in the capability to innovate in products; not only in products, also solutions and services.

    The second key, to be amongst the best of the lower-cost players. In other words, the market is so competitive that even if you have the first key and if you don’t have the second key, you cannot open the door. To get those two keys working, obviously scale and size can help. A combination of two very large players which individually have already gone a long way in meeting those two criteria can be a formidable winner. “

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  4. Nice one Om. Angelo Liberatore – analyst for Credit Suisse, goes into some detail on the the Lucent / Alcatel merger and who might be up next on the consolidation agenda.

    http://tinyurl.com/paq87

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  5. How pretty does Counterpath have to get, to get a look.

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  6. I think it’s better than Sears and K-Mart but I am not sure what real benefits they will quickly amass, especially in trying to merge divergent cultures. I think that GE picking up Lucent would have been a much more interesting play.

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  7. Mr. Carlini would you care to elaborate more on Counterpath and the merging of divergent cultures. I think someone must be the go between and the current climate seems to be receptive.

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  8. Joseph Rosenbaum Saturday, August 5, 2006

    Regarding Counterpath, rumors abound about a soon to be announced deal with a major U.S. Telcom. Have you heard any rumors to that effect, and if so, is that likely to sway other North American Telcoms in Counterpath’s direction?

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  9. raymond battista Thursday, January 25, 2007

    I need a phone number to reach Alcatel,I recently surrendered Lucent stock and have heard nothing for two months.

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  10. [...] CEO Patricia Russo and Chairman Serge Tchuruk. The Franco-American company has proved to be a corporate mismatch that makes the unlikely pairing of Kid Rock & Pamela Anderson seem normal (Hat-tip: Jesse [...]

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