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Shareholders Approve Alcatel-Lucent MergerBy Robert Liu TMCnet Executive Editor Alcatel (News - Alert) and Lucent Technologies (News - Alert) passed a major milestone in completing their mega-merger to create the world’s largest telecom equipment manufacturing (TEM) company after shareholders in two separate special meetings approved the $11 billion deal on Thursday.
Shareholder approval is considered to be a feat for Lucent Chairman and CEO Patricia Russo and Alcatel Chairman and CEO Serge Tchuruk, who have been busy lobbying Wall Street to endorse the deal since terms were finalized on April 2. Despite the sizable scale and numerous business implications of the merger, shareholder approval has been anything but easy.
“As we have said from the start, the primary driver of this combination is to create long-term value for shareowners, customers, and employees,” said Lucent Technologies Chairman and CEO Patricia Russo. “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, wire line and
While some third-party proxy advisors such as Institutional Shareholder Services (ISS) have endorsed the deal, other outfits like Proxinvest recommended that Alcatel shareholders reject the combination at the original terms. Complicating matters is the fact that share prices of both Lucent and Alcatel have fallen precipitously, raising the risk that dissension could reached the critical mass needed to thwart the boards’ efforts.
In addition, the milestone comes just days after Lucent reached an undisclosed settlement with two disgruntled shareholders that could have tripped up the merger. Two lawsuits -- 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 alleging the boards failed in their fiduciary duties to maximize shareholder value. A Superior Court judge in
The merger has already won clearance from the Federal Trade Commission and regulators in the European Union. The only remaining hurdle is the Treasury Department's Committee on Foreign Investments in the United States (CFIUS), which could take up to 90 days.
But when the deal is finally completed, executives on both sides of the Atlantic still face the Herculean task of integrating the two companies together. Russo and Tchuruk have promised cost savings of $1.7 billion (1.4 billion euros) within the first two years. In May, the two companies detailed their merger integration teams. (More on that will be forthcoming in the October issue of INTERNET TELEPHONY Magazine.)
Even though Ericsson’s acquisition of Marconi dates back to last October, many analysts still consider the Alcatel-Lucent deal to be the watershed event that set the wheels of industry consolidation in motion. Since the merger was announced, Nokia has formed a joint venture with Siemens (News - Alert) - ) - ) - ) to combine their telecom equipment divisions. A month later in July, Motorola announced it was partnering up with Huawei on their respective 3G businesses. In addition, 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. |