Dial M for merger

Alcatel and Lucent have announced that they have entered into a merger agreement which has been approved by the directors of both companies, confirming recent industry rumours.

The combined company will have revenues of €21 billion, based on 2005 figures. It will be based in Paris and incorporated in France.

Both companies have said that the merger is a good fit, and that the new company will work together on converging technologies. The new company will have a presence in more than 130 countries.

Patricia Russo, Chairman and CEO of Lucent, will become CEO of the combined company and Serge Tchuruk, Chairman and CEO of Alcatel, will become non-executive chairman. The new company is to be named at a later date.

The companies said they would continue work in the rapidly growing high-end enterprise technologies and markets, including mission critical safety and security applications. The industry’s R&D capabilities, including Bell Labs, have 26,100 R&D engineers and scientists throughout the world.

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.

Alcatel said talks to buy a bigger stake in Thales, the French defence electronics group, would continue.

The merger is subject to customary regulatory and governmental, as well as the approval by shareholders of both companies. The companies expect the transaction to be completed in six to twelve months. Until the merger is completed, both companies will continue to operate their businesses independently.