Alcatel, Lucent Shareholders OK Tie-Up

Alcatel chairman and CEO Serge Tchuruk delivers a speech during a joint ordinary and extraordinary general meeting in Paris, Thursday, Sept. 7, 2006. Alcatel shareholders gathered to vote on whether to go ahead with an US$11 billion (Euros 8.6 billion) acquisition of U.S. rival Lucent Technologies Inc. that would create a new global force in the telecom equipment market. (AP Photo/Christophe Ena) (Christophe Ena - AP)

PARIS -- Alcatel SA and Lucent Technologies Inc. overcame shareholder misgivings to win firm backing Thursday for their 8.4 billion euros ($10.7 billion) tie-up to create a major global telecommunications equipment maker.

The near-simultaneous votes in Paris and Wilmington, Delaware, gave the go-ahead for Alcatel's all-stock acquisition of New Jersey-based Lucent, scheduled for completion by the end of the year.

The stock prices of both companies _ which supply transmission and switching gear to telecom businesses and Internet operators _ have fallen since the April merger announcement, sapping enthusiasm for the deal among investors.

Many Alcatel shareholders had complained that they were paying too much for Lucent in the light of weaker earnings and guidance posted by the U.S. company since the combination was negotiated.

Lucent, which had faced vocal but less widespread opposition from some of its own investors, last week settled two shareholder lawsuits that had threatened to delay the merger vote.

Analysts had nevertheless predicted that Alcatel shareholders would offer their support, concluding that even a badly priced deal was better than none.

Any room for renegotiation was "insufficient to offset increased operational risks from a delay," UBS advised clients two days before the vote.

Recent sector consolidation has increased doubts about whether either company has the critical mass to go it alone. Nokia Corp. and Siemens AG announced a telecom equipment joint venture in June, eight months after LM Ericsson bought Marconi.

"The consolidation in the industry is happening right now. You can't wait it out," said Jim Kelleher, an analyst with New York-based Argus Research.

Lucent Chairman and Chief Executive Patricia Russo, who will lead the new Alcatel-Lucent from its Paris headquarters, told shareholders the deal would create the first truly global company in the sector.

"On our first day in operation, we'll be the No. 1 company in wireline, we'll be No. 3 in wireless and in the top three in services," Russo said.

Alcatel-Lucent will have the industry's broadest product portfolio and one of the largest research and development operations, she said.