WHY MERGE ? ALCATEL LUCENT Technologies The “problem” or opportunity - Money and the opportunity to grow and to accumulate others. - Access to Bell Labs (patents). - A financially critical situation - To compete with Cisco and Nortel in the US. Objectives - larger US market share and access to the major clients of Lucent like At&T - Get out of a critical situation - Create a global telephone equipment giant on both sides of the Atlantic. - A merger of equals ??? - A merger of equals Alternatives - Stay alone or find other merger possibilities - Finance alone the already started restructuring Consequences - Go on competing against Lucent in the US market - No access to Bell Labs. - No savings due to synergy effects - Loss of market share against competitors in the US - Danger of bankruptcy - No savings due to synergy effects Tradeoffs - No access to Bell Labs or a spin-off of Lucent companies involved in research for the US-Army. - Give full access to Bell Laboratories.
THE ACTORS CEO Alcatel S.A. Serge Tchuruk Board of directors Government Shareholders CEO Lucent Henry Schacht Board of directors Government/US-Army Shareholders
First set of Negotiations in 2001 CHATEAU LES MESNULS (YVELINES, FRANCE)
US$22.8 billion payment of Alcatel for a 58% share of the new company
the new company would be incorporated in France
headquartered in the USA
led by Alcatel CEO Serge Tchuruk
a merger of equals ?
The potential agreement formula elaboration Final Negotiations May, 25-27th 2001 50 executives prepare the papers, merger announcement planed for Tuesday
CEOs jointly announced that they were breaking off negotiations and abandoning the deal First set of Negotiations in 2001
First set of Negotiations in 2001 WHAT HAPPENED ? INTEGRATIVE NEGOTIATIONS ? Lucent CEO Harry Schacht felt Alcatel would dominate the new board of directors by 8 to 6 seats a merger of equals The Alcatel Executive Board denied any compromise on their representation within the new company. “ to take over” the acceptable balance was not reached
S. Tchuruk recalled his near victory five years ago by saying: " I don't know if Henry Schacht is by any chance listening in on this call, but if he is, I would remind him of this time and send him my warmest regards." conclusion
Lucent is stronger in IP Multimedia Subsystem (IMS) architecture, CDMA and services.
Alcatel is stronger in access and optical markets.
Lucent has stronger relationships with American carriers.
Alcatel is stronger in Europe and emerging markets.
Significant cost savings by eliminating redundancies in their many common areas (access, optical technologies, services businesses).
Interests for Merger
New actors in a different Environment, 2006 Merger The main objective of this merger is to generate significant growth of salaries and results. This rapprochement will create values for shareholders from both companies that will get advantages from the strong resulting dynamic. Serge Tchuruk, Alcatel CEO
Alcatel-Lucent Merger: Ten Things You Need To Know By David Sims TMCnet Contributing Editor 1. French firm Alcatel ( News - Alert ) SA is in talks to "merge" with Lucent Technologies ( News - Alert ), Inc. to form a $34 billion company -- Alcatel $20 billion, Lucent $17.7 billion -- with annual sales of over $25 billion. 2. The deal would not offer a stock premium to either set of shareholders. 2a. Right, give us that funky quote again -- Alcatel and Lucent are "engaged in discussions about a potential merger of equals that is intended to be priced at market," 2b. The company would be based in Paris and its CEO would be Lucent's Patricia Russo, according to current speculations. 3 There are three important factors in telecom right now -- consolidation, consolidation and consolidation. 3a. Remember when there were seven Baby Bells? Operating on the old Ottoman Empire's royal principle of killing off all your siblings to consolidate power, there are three now. 3b. Sprint's the only independent long-distance carrier left. Everyone else is getting bigger and bigger. 3c. And this skins Lucent and Alcatel's cats because… "The bigger the (telecom) carriers become, the power shifts more to the customer," Ping Zhao, a senior telecom analyst at CreditSights told USA Today . 4. They've tried this before. About five years ago Alcatel tried to buy Lucent, which was all for the deal in principle, but couldn’t nail down the management control issues, so it fell apart. A Deutsche Bank investment advisory released today reminds everyone that "the devil is in the details, because there is no transaction as of yet. Just talks. Let’s wait to see how this 'merger of equals' actually gets structured." 4a. Because, as a wise man once noted, some are more equal than others. 4b. It isn't that Lucent's the prettiest girl on the market -- if the deal goes through the combined entity is still smaller than Ericsson ( News - Alert ), Nokia ( News - Alert ) and Siemens. And there's all that debt and $2.4 billion in unfunded pension and benefit obligations. 4c. But she does have great CDMA, and she's got great family connections: George Calhoun, a professor of business and technology at the Stevens Institute of Technology told USA Today that Alcatel's been trying for 20 years to penetrate the U.S. market. 4d. Her… sales are kinda flat, too. And it's not like her CDMA's a really attractive long-term asset. Oh well, love is blind. 5. Seeing as how Lucent does between $4 and $5 billion in revenue from selling wireless gear, much more than Alcatel, it's not like she's an ugly old hag. 6. If we wouldn't let a Dubai company take over our ports, why would we let a French company take over Bell Labs? 6a. Shoddop. 7. Ericsson, once linked romantically to Lucent, is forever holding its peace on whether it still carries a torch. 7a. Yeah, wasn't there some gossip in the City of London along those lines? 7b. Those tabloids, there are lots of names floating around. What, somebody has photographs? Ericsson just married Marconi for $2 billion in dowry, this ain't Big Love . 8. The one thing everybody seems to agree on is that there will be more consolidation, with Tellabs and Ciena, for example, looking to be picked up, and Nortel ( News - Alert ) looking to pick someone up, according to Steven Kamman . 9. Let's talk jobs -- or raison d'riot , as they're called in France. Alcatel has over 50,000 of them (insert "fifty thousand Frenchman" punch line here), and Lucent has 30,000, down from 46,000 in 2002. Guess which ones are going to get whacked. Hint: Renaults are a lot more flammable than Fords. 10. Business considerations, aside, it's probably easier to get Southern Baptist Sunday Schools approved in Iran than to get regulatory approval for this deal in Washington right now. 10a. Industry analyst Jeff Kagan says " the issue of foreign ownership of a US telecom firm may raise concerns that will have to be addressed." 10b. That's a nice way to put it. David Sims is contributing editor for TMCnet. For more articles please visit David Sims' columnist page .
Selon Le Figaro ''Alcatel-Lucent : l'union rêvée de Serge Tchuruk'' , 27 mars 2006, sur l'exercice fiscal qui s'est achevé le 30 septembre 2005, Patricia Russo a gagné 8,4 millions de dollars de salaire et bonus, contre une rémunération globale de 4,2 millions en 2004. De son côté, Serge Tchuruk a touché 2,8 millions d'euros de salaire et primes en 2005, soit une augmentation de 86,7% en deux ans.