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Alcatel-Lucent: One Step Closer
[September 05, 2006]

Alcatel-Lucent: One Step Closer

TMCnet Executive Editor
 

Even though Alcatel’s (News - Alert) merger with Lucent Technologies (News - Alert) won’t go before shareholders for approval until Thursday, the multi-billion-dollar deal has already cleared a vexing hurdle and is one step closer to completion.

 

On Friday, Lucent reached a settlement with two legal actions that could have tripped up the merger. The memorandum of understanding with the plaintiffs was disclosed in an SEC filing made late last week to amend the proxy materials that go before shareholders, which are set to vote on the deal on September 7.


 

The two suits -- Resnick v. Lucent Technologies, et al, and AR Maley Trust v. Lucent Technologies, et al -- were filed shortly after Alcatel announced its intentions to merge with Ma Bell offshoot on April 2. Both plaintiffs alleged that Lucent’s board failed in their fiduciary duties to maximize shareholder value when the company agreed to Alcatel’s terms. A judge in Superior Court of New Jersey in Union County was set to hear opening arguments in the cases on September 6 – a day before both companies’ shareholders were set to vote. (To view the filing, click here.)

 

But now, as a result of the settlement, “the September 6, 2006 hearing on the preliminary injunction will not occur,” Lucent said in its SEC filing. “The settlement will be subject to customary conditions including court approval and consummation of the merger. The terms of the settlement will be described in a notice that will be furnished at a later date.”

 

The legal maneuvers now bring the Alcatel-Lucent merger one step closer to completion. Although certain institutional investors still stand opposed to the deal, there isn’t enough critical mass in the dissension ranks. And third-party proxy advisors such as Institutional Shareholder Services (ISS) have already endorsed the deal. In addition, the merger has already won clearance from regulators in the Federal Trade Commission and the European Union.

 

Company official Mary Ward told TMCnet that once shareholders approve the deal, the only remaining hurdle is the Treasury Department's Committee on Foreign Investments in the United States (CFIUS).  “We have submitted a formal notice to CFIUS seeking government approval for the pending merger. Our understanding is that the entire process can take up to 90 days after filing the formal notice,” Ward said in an email exchange.

 

On Friday, Alcatel also reached an agreement to acquire the UMTS radio access assets of Nortel (News - Alert) - ) - ) for $320 million in an effort to further build out the wireless side of its telecom equipment business.

 

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Robert Liu is Executive Editor at TMCnet. Previously, he was Executive Editor at Jupitermedia and has also written for CNN, A&E, Dow Jones and Bloomberg. For more articles, please visit Robert Liu's columnist page.


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