Lucent revealed it is in discussions with France's Alcatel regarding a $34 billion merger of equals that would be priced at market, meaning with no premium on their stock prices. The two attempted a merger in 2001, but ended talks when they couldn't agree on control of the entity. This time around, Lucent CEO Patricia Russo would reportedly be CEO of the combined company, and the firms would have equal representation on a new board of directors.
Alcatel is Europe's second-largest gear maker but has continually failed to make a big presence in the U.S. market. Lucent has historically struggled to win W-CDMA contracts in Europe. Interestingly, Alcatel had a stellar fourth quarter, growing net profit to $417 million in the quarter compared with about $8 million a year earlier; annual net profit was up 61 percent in 2005. But its results have been largely ignored by financial analysts. Until today, an analyst hasn't upgraded or downgraded the company since March 2005.
To read more about the merger talks between Lucent and Alcatel:
- check out this article from Dow Jones
- take a look at analyst ratings from Newratings
- check out this blog on Alcatel's quarterly results