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Technology Stocks : Alcatel (ALA) and France -- Ignore unavailable to you. Want to Upgrade?

To: el_seed who wrote (3365)	5/29/2001 2:29:45 PM
From: Steve Fancy	Read Replies (1) \| Respond to of 3891

Alcatel/Lucent talks reach make-or-break point Reuters, 05/29/2001 13:50 LONDON/NEW YORK, May 29 (Reuters) - France's Alcatel (SBF:CGEP) and Lucent Technologies Inc (NYSE:LU) were on Tuesday locked in tense talks to hammer out final differences and unveil a near $23 billion purchase of the loss-making U.S. group. Industry sources said if last minute hurdles were not cleared to a takeover, that had been expected to be announced on Wednesday, the two telecoms equipment companies might abandon merger plans as their self-imposed deadline draws near. "There are a lot of problems," one industry source said. "If they're not solved by tonight, the deal is off." The two equipment makers, who have declined to comment on the progress of discussions, have been negotiating a non-premium takeover, which industry sources have said would be structured as a "merger of equals." But Alcatel is clearly bidding for Lucent, which posted a first-half loss of $4.7 billion this fiscal year. Lucent shareholders would get a 20-percent stake in the U.S. group's optical component's group Agere Systems Inc. (NYSE:AGR.A) as an incentive to approve the deal. But Lucent's remaining Agere stake is not expected to be included in this deal. If final problems are solved, the deal is likely to be announced on Wednesday -- midday in Paris and before markets open in the United States -- although sources have cautioned that the structure and timing may change. Newspapers say that under the all-share deal currently being discussed, Lucent shareholders would receive a fixed exchange ratio of 0.2425 Alcatel shares for each Lucent share. French analysts welcomed the tipped terms, under which Alcatel shareholders would own about 58 percent of the combined company. This would limit any stock overhang from U.S. fund managers, who have to curb their European stock exposure. But as Alcatel's shares slipped almost three percent to close at 30.85 euros, both analysts and traders cautioned that until the final deal was announced, fears would remain over whether Alcatel could pull it off -- and its longer-term risks. Lucent, which carries a massive debt load, has fallen behind rivals such as Nortel Networks Corp. (TSE:NT) (NYSE:NT) and Cisco Systems Inc. (NASDAQ:CSCO) due to high management turnover and a series of product-development failures. However, should it fall under French control, one industry source has said Alcatel Chief Executive Serge Tchuruk would lead the combined company, while Lucent Chairman Henry Schacht would assume a lower, but also senior position. A combined company would be legally incorporated in Paris, but headquartered in Lucent's home of Murray Hill, New Jersey, sources have said. fax +44 20 7542 3722, e-mail: lucas.grinsven@reuters.com)) Copyright 2001, Reuters News Service