It's big, but is it beautiful‾

After a whirlwind romance, Alcatel on April 2, barely a week after confirming rumors that talks were underway, announced its x11.1-billion ($13.4bn) merger with Lucent. The move creates a combined company with annual revenues (based on 2005) of some x21 billion, making it arguably the world's largest telecoms network equipment manufacturer.
So the world has come full circle: five years ago, a similar tie-up fell to bits amid talk of cultural incompatibility and an element of 'sibling rivalry' between two vendors which regularly face up to each other in world markets.
One of the attractions of the deal involve the inevitable cost synergies, which are reckoned to reach x1.4 billion within three years. The lion's share of that is expected to come from payroll cuts equating to 10% of the workforce, or some 8,000 jobs.
'This combination is about a strategic fit between two experienced and well-respected global communications leaders, which together will become the global leader in convergence,' said Serge Tchuruk, chairman and CEO of Alcatel. Tchuruk, who is due to retire this year, will become non-executive chairman of the combined company.
'The combination creates a new industry competitor with the most comprehensive portfolio,' added Lucent chairman and CEO, Patricia Russo, who is set to become CEO of the combined company. Indeed, many cynics suggest that this solution to the quandary over Tchuruk's succession at Alcatel was one of the drivers behind the deal.
The deal will inevitably be subject to regulatory scrutiny and this could yet prove problematic in the US; the ICT industry is a strategically sensitive one and allowing a major manufacturer to fall into the hands of a French company may not please everyone, given the current political climate.
This probably explains why the deal is described as a 'merger' rather than a takeover. In fact, Alcatel shareholders will hold 60% of the combined company, although there will be equal representation on the management board, initially at least. But can such harmony last‾

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