Alcatel to Acquire Lucent in $13.4B Deal

Alcatel to Acquire Lucent in $13.4B Deal - Apr 2, 2006 07:25 PM (AP Online)

By LINDA A. JOHNSON AP Business Writer

France's Alcatel SA will acquire rival telecom equipment maker Lucent Technologies Inc. in a $13.4 billion (11.1 billion euro) stock swap that would form an industry powerhouse with a product line broad enough to entice customers in a consolidating telecom industry.

Company leaders said Sunday they plan to shed 10 percent of the combined work force _ about 8,800 jobs _ after the deal closes.

The combined business, to be based in Paris, will work to capitalize on fast-growing converged offerings such as "triple-play" Internet, phone and TV packages that have become popular in the telecom field, the companies said.

The new company will have annual sales of $25 billion (21 billion euros) _ ahead of LM Ericsson's $19.9 billion (16.4 billion euros) _ and an 18 percent share of the fiercely competitive market for telecom gear.

The tie-up will generate annualized pretax savings of $1.7 billion (1.4 billion euros) within three years, the companies said. Just over half the savings will come from job eliminations, with the rest by consolidating purchasing, research and development and support services such as sales and marketing.

The combination should add to per-share earnings in the first year, excluding restructuring charges expected to total about $1.7 billion (1.4 billion euros) and asset writedowns.


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