Alcatel-Lucent: agreement

The agreement is done. Both companies have agreed to merge and form a leading telecom vendor. The combined company, not yet named, will have revenues of about €21bn and a capitalization of about €28bn.  Alcatel will hold about 60% of the combined company and Lucent remaining 40%, but management (6 from each company) will be equally split. Serge Tchuruck will be the Chairman, while Patricia Russo will be the CEO and Mike Quigley  will be COO. Jean-Pascal Beaufret will be the CFO.  Headquarters will be located in Paris (France). About 9,000 jobs should be fired in coming months on both sides of the Atlantic.

This merger is a strategic move between two companies having similar history, which know very well each other, and already tried to merge five years ago. It is a logical move in current market conditions, but that does not mean the sky will be ever blue. Both companies have different cultures, right, but Alcatel has already merge with ITT Telecom in 87, DSC and Newbridge, and is used to deal with a  typical  American culture. This should strongly helped, as well as an existing strong base in Plano, TX.  English is the Alcatel working language since 1987. I do not believe in a culture clash, but I cannot exclude difficulties. Rationalization in product portfolio should be interesting to look at. Overlap in products is mainly on traditional technologies, while complementarity is the key word on emerging technologies. A separate and independent U.S. subsidiary, entirely managed by US citizens, will deal with U.S. defence and intelligence agencies contracts. The satellite business case is not yet definitively solved, but should be rapidly managed by European and French people. Alcatel could get additional 20%-25% in Thales equity in exchange of its Space division. In addition, analysts do not see big regulatory hurdles for the deal.