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Technology Stocks : Lucent Technologies (LU)

LU 3.120

+11.4%

Oct 31 9:30 AM EST

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To: DHB who wrote (21844)	4/2/2006 12:37:19 PM
From: elmatador	of 21876

Alcatel, Lucent agree to merge; Alcatel holders to own 60 pct of company PARIS (AFX) - Alcatel and Lucent Technologies said they have reached a merger agreement to create a new group with annual sales of about 21 bln eur. The companies said each Lucent common share will be replaced by 0.1952 of an American Depository Share (ADS) representing an ordinary Alcatel share. Alcatel shareholders will own about 60 pct of the merged company and Lucent shareholders will own about 40 pct. The companies also said Alcatel's board has approved a continuation of talks with Thales toward a tie-up in which Alcatel will contribute certain assets to Thales in exchange for an increased stake. The Alcatel-Lucent merger is expected to result in synergies of about 1.4 bln eur within three years. The merged company, still unnamed, will be based in Paris. Its shares will continue to be traded on Euronext, and ADSs will be traded on the New York Stock Exchange. Lucent CEO Patricia Russo will be based in Paris as the merged company's CEO. Alcatel chief executive Serge Tchuruk, widely expected to retire later this year, will be non-executive chairman. Its board of directors will have seven members from Alcatel and seven from Lucent. Lucent president Mike Quigley will become chief operating officer and Alcatel chief financial officer Jean-Pascal Beaufret will be the merged company's CFO. The merged company's workforce will be cut by about 10 pct, with a substantial majority of the restructuring to occur in the first two years. The company will create an independent US unit that will hold contracts with the US government and have a board comprised of three independent US citizens 'acceptable to the US government.' The talks with Thales have been underway for some time. It has been reported that Alcatel aims to combine its satellite operations with those of Thales, in exchange for raising its stake in Thales to around 25 pct from the current 9.5 pct. It emerged last week that the French government has blocked the tie-up from occurring unless European Aeronautic Defence and Space Co (EADS) is also involved, a source close to the matter said. The government has a 31.3 pct stake in Thales, and together with Lagardere has a 30 pct stake in EADS. The Alcatel-Lucent merger is expected to be completed within six to 12 months.

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