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)

Russo and Alcatel boss Serge Tchuruk _ already named non-executive chairman of the combined company _ both faced down hecklers as they took the agreement to a vote.

"Mark my words, within one year you will want to leave," shareholder activist Evelyn Davis admonished Russo. "The French are going to run the show."

When it came to the count, however, the deal passed with 94 percent of ballots cast by Lucent shareholders, although a low turnout meant that it only just scraped the required majority of all outstanding shares. Among Alcatel shareholders, the acquisition proposal won more than 85 percent of votes cast.

The combined company will have a strong, evenly distributed presence around the globe _ with Europe, North America and Asia each supplying close to one-third of its 19.5 billion euros ($25 billion) annual sales. North America currently accounts for 14 percent of Alcatel's business, while Europe generates 13 percent of Lucent's.

Alcatel is also buying Nortel Networks Corp.'s wireless business for $320 million _ adding a portfolio of UMTS mobile phone technology to its own strength in GSM networks and Lucent's expertise in CDMA, the third main wireless standard.

The combination of Alcatel and Lucent will generate annual synergies of 1.4 billion euros ($1.7 billion) within three years, both companies say _ of which over half will result from the planned shedding of 9,000 jobs, or about one in ten workers.

Thursday's votes leave one remaining obstacle to the deal: the U.S. government's Committee on Foreign Investment in the United States.

In order to answer concerns about the Lucent security and defense technologies to be acquired by Alcatel, the two companies have agreed to ring-fence the sensitive activities under a new subsidiary headed by former U.S. defense secretary William Perry, former CIA chief James Woolsey and Kenneth Minihan, one-time head of the National Security Agency.

The U.S. committee is expected to give its verdict on the plans by the end of the year, Tchuruk said Thursday.

Alcatel shares fell 1.6 percent to close at 9.43 euros ($12.08) in Paris trading, while Lucent shares ended 0.9 percent lower $2.25 on the New York Stock Exchange.

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AP Business Writer Linda A. Johnson in Trenton, New Jersey, contributed to this report.

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On the Net:

http://www.lucent.com

http://www.alcatel.com