In April, Alcatel SA announced a $11.6bn bid for Lucent Technologies Inc, in order to become what it said would be the largest telecommunications equipment maker in the world. The two companies had first proposed a merger in 2001, but talks were called off after the two failed to agree terms and meet regulatory demands.
While the new deal has been touted as a merger of equals, Alcatel shareholders control about 60% of the new company. The board is evenly split between former Alcatel and Lucent directors.
Speaking to journalists on Friday in Paris, Alcatel-Lucent’s newly appointed chairman Serge Tchuruk said: Today is the completion of an obstacle course that took eight months, but that is quite short considering the complexity of the deal. We had to answer regulatory questions on both sides on the Atlantic as well as answer shareholder questions.
President George W Bush earlier this month approved the deal on the provision that national security issues were met.
Our customers, to put it mildly, were also very interested, Tchuruk said, but we have done a lot of work, and now these two companies are one.
Former Lucent boss Patricia Russo has been appointed as CEO of Alcatel-Lucent. It is exciting day for us, and we are very pleased to have arrived at what we call operational day one, she said. The breadth and depth of our product portfolio is unparalleled in this industry, and our geographic reach and balance of business means that we are now a well-balanced company.
Alcatel-Lucent’s product portfolio now includes IPTV, broadband access, carrier IP, IMS, and next-generation networks, 3G spectrum UMTS, and CDMA. Russo said the new company is divided into several business units: carrier markets (which includes wireless, wireline, and convergence), enterprise, and services. You should expect to see this company intensify its focus on the enterprise and service provider market, she said.
Russo made light of any cultural and organizational problems caused by merging a US company with a French company. Culturally, we share similar views about important issues, she said. There is an awful amount of commonalty between the people. She said that for a while now Alcatel has used English as its main language to communicate globally.
However, Tchuruk was very clear about where the power lies in the new company. Alcatel-Lucent is a Franco/American company, registered in France, and governed by French laws, said Tchuruk. Its shares are traded on Euronext Paris and the New York Stock Exchange under a new common symbol ALU.
Alcatel-Lucent had already publicly stated that the deal expects to save about 1.4bn euros ($1.8bn), within three years. This means that 9,000 workers are to be axed, and there is speculation that the majority of cuts will be in North Amercia, where labor laws are a lot more relaxed than France, and unions have a lot less power.
When asked about these job cuts, Russo was less than forthcoming. We have previously announced expected synergies and the expected impact on employees, and we have not said anything more detailed than that, she said. We have previously said 9,000 people will go and we continue to believe that is the right number to use for planning purposes. She said Alcatel-Lucent is now executing this plan, which will impact on people over the next several months.
Russo also admitted that the merger would be likely to have an impact on sales at the combined company. I don’t want to predict the impact of the distraction factor, she said, referring to any likely impact on sales following the merger. It is human and realistic to expect some impact for a short period of time while customers pause for a bit to understand our new portfolio, or while people are distracted by the deal.
