Alcatel, Lucent shareholders should approve pact, firms say

Despite a rocky couple of months for both Alcatel and Lucent Technologies, shareholders on both sides should approve their upcoming merger, according to advisory firms quoted in an Associated Press report.


The report said Alcatel and Lucent shareholders would meet September 7 to vote on the merger of the two telecom equipment makers.


The deal had faced critics from both sides, with particular noise coming from the Alcatel camp, as Lucent's profit warning and disappointing quarterly results highlighted its recent struggles, the report said.


But Institutional Shareholder Services and Glass, Lewis & Co. said the two companies were better off together than apart.


"Ultimately, we believe that the proposed combination is somewhat of a bitter pill for shareholders," the Glass Lewis report, quoted by Associated Press, said. "Despite these troubles, it is difficult to argue against the strategic rationale of the proposed combination."


If the companies are able to turn out the merger-cost savings they are targeting, the combined entity will be in a stronger competitive position compared with its peers, according to the report, although ISS noted that executing on the combination will be the company's biggest risk.


Lucent and Alcatel, locked in a stock-swap agreement, had seen their shares sink since the deal was announced, the report said.