Alcatel and Lucent Technologies confirmed their plans to merge, creating a global communications solutions provider with US$25 billion in annual sales and a broad product portfolio in wireless and wireline and networking. The companies said the merger was driven by the opportunity to create a truly global company with deep relationships with every major service provider. They also pointed to the ongoing consolidations amongst global service providers.
Key points of the deal include:
- Alcatel shareholders will own approximately 60 percent of the combined company and Lucent shareholders will own approximately 40 percent of the combined company.
- Lucent shareowners will receive 0.1952 of an ADS (American Depositary Share) representing ordinary shares of Alcatel (as the combined company) for every common share of Lucent that they currently hold.
- The combined company will be incorporated in France and based in Paris
- The name of the combined company will be determined at a later date
- The merger is expected to yield operational cost savings of US$1.7 billion within 3 years by consolidating support functions, optimizing the supply chain and procurement structure, leveraging R&D and services across a larger base, and reducing the combined worldwide workforce by approximately 10 percent.
- As of December 31, 2005, the combined companies had about 88,000 employees.
- The merger also will result in approximately EUR 1.4 billion (USD1.7 billion) in new cash restructuring charges, with the charges to be recorded primarily in the first year.
- The major growth areas for the combined company include 3G Mobility, Triple Play and IPTV, Global Services and Support, the IMS Network Transformation.
- Based on calendar 2005 sales, the combined company will have revenues of approximately EUR 21 billion (USD25 billion), divided almost evenly among North America, Europe and the rest of the world.
- The R&D of the company would include 26,100 employees (15,600 from Alcatel and 10,500 from Lucent) and encompass approximately 25,000 patents.
- The combined company intends to form a separate, independent U.S. subsidiary holding certain contracts with U.S. government agencies. This subsidiary would be separately managed by a board, to be composed of three independent U.S. citizens acceptable to the U.S. government.
- Management structure: Serge Tchuruk will be non-Executive Chairman. The combined company will be headed by Patricia Russo, CEO, and will also consist of Mike Quigley, COO; Frank D'Amelio, Senior EVP, who will oversee the integration and the operations; Jean-Pascal Beaufret, CFO; Etienne Fouques, EVP, who will supervise the emerging countries strategy; and Claire Pedini, Senior VP, Human Resources.
- The merger is subject to customary regulatory and governmental reviews in the United States, Europe and elsewhere, as well as the approval by shareholders of both companies and other customary conditions.
| Alcatel's Prior Acquisitions | |||
| Native Networks | Optical Ethernet | $55 million in cash | Mar 05 |
| Right Vision | Software-based Internet appliances that provide Internet access, email and Web applications, as well as security and simplified management capabilitie | not disclosed | Nov 04 |
| Spatial Wireless | a multi-standard mobile softswitch | US$250 million in stock | Sep 04 |
| eDial | SIP-based platform and applications for conferencing of voice, data and video | US$27 million in stock and cash | Sep 04 |
| WaterCove Networks | GPRS Gateway Support Node | not disclosed | Jan 04 |
| TiMetra | IP/MPLS edge routers | $150 million in stock | May 03 |
Telera | VoiceXML platform for making Web content accessible via telephone | $136 million in stock | May 02 |
| iMagicTV | Multi-channel digital television over broadband | US$30 million | Feb 03 |
Astral Point Communications | 10 Gbps-capable SONET metro networking platform | Euro 153 million (US$136 million) in stock | Jan 02 |
Kymata | planar technology for high-end passive optical components, including | Euro 134 million (US$117 million) in stock | Jul 01 |
| Innovative Fibers | optical filters, including Fiber Bragg Gratings, a passive optical component used in DWDM systems | $175 million | Jul 00 |
| Newbridge Networks | ATM, IP and LMDS data networking platforms | $7.1 billion in stock | Feb 00 |
| Genesys Telecommunications Laboratories | call center solutions | $1.5 billion in stock | Sep 99 |
| Internet Devices Inc. | IP VPN solutions | $180 million in cash | Jun 99 |
| Xylan | LAN/WAN switches | $2 billion in cash | Mar 99 |
| Assured Access | remote access concentrators | $350 million in cash | Mar 99 |
| Packet Engines | Layer 3 Gigabit Ethernet switches | $315 million in cash | Oct 98 |
| DSC Communications | digital loop carriers and transmission systems, | $4.4 billion in stock | Jun 98
|
| Selected list of Past Lucent Acquisitions | |||
| Riverstone | Ethernet routers/switches | $207 million | Mar 06 |
| Telica | softswitches | $295 million | May 04 |
| SpringTide Networks | IP Services switch supporting VPNs, managed firewalls, voice and multimedia services | $1.3 billion | Jul 00 |
| Chromatis Networks | Metropolis system that multiplexes TDM, ATM, and IP services over a single wavelength | $4.5 billion | May 00 |
| Nexabit Networks | Terabit class IP core switch/router | $900 million in stock | Jun 99 |
| Ascend Communications | WAN switching and access | $20 billion in stock | Jan 99 |
| Kenan Systems | billing software systems | $1.4 billion in stock | Jan 99 |
| Yurie Systems | ATM access equipment | $1 billion in cash | April 98 |
| HP's Fixed Wireless Broadband Unit | LMDS | undisclosed | Feb 98 |
| Prominet | Gigabit Ethernet | $200 million in stock | Dec 97 |
| Livingston Enterprises | remote access equipment | $650 million in stock | Oct 97 |
| Octel Communications | voice mail systems | $1.8 billion in cash | July 97 |
| Agile Networks | VLAN technology | undisclosed | Oct 96 |
