The infrastructure industry’s merger of the season looks to be a done deal, as Lucent Technologies Inc. and Alcatel Inc. announced that their shareholders approved Alcatel’s $10.7 billion proposal to acquire Lucent in the midst of fierce global competition for wireless infrastructure market share.
Lucent said its shareholders “overwhelmingly” voted in favor of the deal, and said details of the vote will be available in an upcoming filing with the Securities and Exchange Commission.
“As we have said from the start, the primary driver of this combination is to create long-term value for shareowners, customers and employees,” stated Patricia Russo, Lucent’s chairman and chief executive officer. “Today we received approval for the merger from Lucent’s shareowners, and as a result, we are another step closer to creating the first truly global communications solutions provider with the broadest wireless, wireline and services portfolio in the industry.”
Serge Tchuruk, chairman and CEO of Alcatel, said, “I’m delighted that Alcatel’s shareholders have approved our strategic merger with Lucent Technologies, and I thank them for their trust. This significant transaction is about creating the world leader in our industry. This offensive strategy, strengthened by the projects to acquire some of Nortel (Networks Ltd.)’s assets and the reinforcement of our partnership with Thales, aims to increase Alcatel’s value for its shareholders, and to provide its customers with the broadest portfolio and to give its employees great opportunities. We remain confident in the closing of these three strategic moves by the end of the year, when all the necessary approvals are granted.”
Alcatel announced two weeks ago plans to acquire Nortel’s UMTS assets for $320 million.
The companies have already cleared key regulatory and antitrust approvals in the United States and the European Union, and the companies have submitted formal notice to the Committee on Foreign Investment in the United States seeking approval of their pending merger.
Though some analysts have said Alcatel’s $10.7 billion offer to acquire Lucent is too generous given Lucent’s recent lackluster earnings reports, others have pointed out that Alcatel and Lucent will be in a stronger position as a combined company to compete against infrastructure competitors such as L.M. Ericsson and Nokia Siemens Networks.
While shareholders were voting on the transaction, news began circulating that the SEC may take action against Lucent over its alleged corrupt business practices in China.
The SEC likely will take action against Lucent over the matter, the company said in an SEC filing.
The allegations stem from Lucent’s April 2004 firing of four senior executives in its Chinese operation after the vendor said it discovered “internal control deficiencies” as well as signs that its executives violated the U.S. Foreign Corrupt Practices Act. Lucent said it reported the information to both the SEC and the Department of Justice and has been cooperating with investigators.
