Alcatel, Lucent mull merger

But a deal is unlikely to come off


Alcatel has held talks with Lucent Technologies concerning a possible acquisition or merger of the two companies.

According to a report in Wall Street Journal wider discussions flowed out of negotiations about the sale of Lucent's fibre-optic business to Alcatel, which debt-ridden Lucent values at $6 billion.

The paper quotes unnamed people familiar with the situation who told it of the talks but also suggested the chance of a deal are slim. Among other reasons putting together a package attractive to Lucent shareholders would be difficult in current market conditions.

Alcatel and Lucent both have market capitalisation of around $35 billion. However French-based Alcatel has weathered the fall in spending on telecommunications equipment far better than Lucent, which earlier this week announced that it lost $3.69 billion in its second quarter.

Lucent, an AT&T spin-off, has been hit by a string of disasters - last year it issued a steady flow of profit warnings, ousted its chief executive Richard McGinn, and was forced to restate its fourth quarter sales. In an attempt to turn around its business Lucent has launched a restructuring program, which involves the loss of a total of 16,000 jobs at the firm. ®

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