Paris – Alcatel SA will acquire U.S.-based Lucent Technologies Inc. in a $13.4 billion stock swap to form a stronger player in the fiercely competitive telecom equipment market, the companies announced Sunday. About 8,800 jobs will be cut.
Lucent has about 500 workers in Colorado.
The combined business, to be based in Paris, will make the most of fast-growing converged offerings such as “triple-play” Internet, phone and TV packages, the companies said. It will have annual sales of $25 billion – ahead of LM Ericsson’s $19.9 billion.
The new company will generate $1.7 billion in savings within three years, the companies said. The savings will come from a 10 percent cut to the 88,000-strong combined global workforce as well as from consolidated purchasing, support services and research and development.
The new Alcatel-Lucent – whose new name is to be announced later – should be better equipped to weather intense competition in the telecom equipment market.
Analysts have said the acquisition is a good fit, as well as helping the combined company stand up to pricing pressures from larger telecom service providers emerging from a new wave of consolidation. Alcatel and Lucent had tried to merge once before, but talks ended without a deal in 2001.
The combined business will be led by Lucent CEO Patricia Russo. Alcatel chairman and CEO Serge Tchuruk will become nonexecutive chairman.
The 14-member board of directors will include Russo, Tchuruk, five of the current directors from each company and two new independent European directors to be mutually agreed upon, the companies said.
Though Lucent and Alcatel described the deal a “merger of equals,” Alcatel shareholders will hold about 60 percent of the new company and Lucent shareholders 40 percent under the terms of the transaction.
Paris-based Alcatel has more revenues and employees, but Lucent, based in Murray Hill, N.J., is slightly more profitable.
