Alcatel and Lucent discussed full merger -WSJ .Another dream of those who what get out of Lucent shares.
With Sagawa again recommending Lucent (LOL) I am not surprised to hear that.
(UPDATE: Adds Alcatel no comment, traders, shares)
By Noah Barkin
PARIS, April 27 (Reuters) - French telecoms equipment group Alcatel and U.S. peer Lucent Technologies (NYSE:LU - news)
have been holding talks on a full-blown merger although the chances of a deal materialising are slim, the Wall Street Journal
Europe reported on Friday.
Citing sources familiar with the situation, the paper said the two
had been holding off-and-on discussions for some time but had
not talked about specific financial terms for a merger.
The paper said that structuring a transatlantic deal between the
companies could raise a host of issues that may prove too
difficult to resolve.
Alcatel declined to comment on the report. The paper said
Lucent had also declined comment.
Alcatel said on Thursday it had made an initial offer for the fibre
optics division of Lucent, which is on the auction block. The
division would complement Alcatel's Optronics
(NasdaqNM:ALAO - news) optical component unit, which
trades as a tracking stock.
But a full-blown merger would unite two communications
equipment giants. The mere prospect of such a move is a
reflection of the sharp slowdown in the telecommunications
market over the past year as debt-laden mobile operators rein in their investments.
Markets are eager for a cure to the overcapacity problems caused by the slowdown, after equipment makers churned out
new infrastructure ahead of an anticipated rush to next-generation mobile Internet technology.
``A lot of people were worried about Lucent and this can only be good news in terms of consolidation taking out capacity,''
said a London-based dealer.
``We need to see consolidation and closures to firm up pricing in telecoms issues. I'm sure this will be a driver.''
SIMILARLY VALUED
Alcatel and Lucent are fairly similarly valued, each having a market capitalisation of about 40 billion euros.
Shares in the French firm were down 0.54 percent at 33.45 euros at 0749 GMT. They gained 4.18 percent on Thursday after
the company released solid first quarter results, scaled back its 2001 outlook and said it would outsource handset production
to cope with slowing growth.
``There is concern over Alcatel's outlook and a possible alliance with Lucent would not please as it would increase Alcatel's
exposure to the U.S.,'' said a trader.
However, another trader called the story a ``non-event'' in the markets and said he did not expect much would come of it, at
least in the near-term.
Earlier this week, Lucent reported a $3.7 billion second-quarter loss, but saw its shares surge on hopes for a turnaround and
return to breakeven at the group.
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