Amid opposition, Alcatel likely to merge with Lucent

Despite some opposition in Europe, the $11-billion merger of Alcatel and Lucent appears likely to squeak through when the companies' long-suffering stockholders vote on the deal this week, an Associated Press report said.

The report said the heads of the two struggling telecom equipment and service companies were hardly taking approval for granted, given the collapse of a prior combination attempt five years ago.

Serge Tchuruk, CEO of Paris-based Alcatel since 1995, and Patricia Russo, CEO of New Jersey-based Lucent since 2002, had been busy promoting Alcatel's proposed stock-for-stock acquisition of Lucent to the financial community, the report said.

They said fusing two companies with complementary technology and limited overlap geographically would improve profit margins by cutting about 9,000 of 88,000 combined jobs, reducing other costs and negotiating better prices with suppliers and their biggest customers.

The companies had predicted they would see about $1.7 billion in savings within three years, the report said.

According to Russo, the deal would create a company with the industry's broadest portfolio of products and one of the largest research and development operations, including Lucent's storied Bell Labs.

Russo would be the CEO of the new company, Alcatel/Lucent, and Tchuruk would be board chairman, the report said.

Shortly before Russo took over at Lucent, a proposal to combine the two companies fell apart midstream, with analysts blaming Alcatel's unwillingness to make it a merger of equals.

However, European analysts and a French institutional investor advisory service, Proxinvest, said the merger agreement shortchanged Alcatel shareholders, saddling them with Lucent's weaker balance sheet and substantial future pension obligations, the Associated Press report said.