Alcatel shares soar on details of Lucent deal

3rd April 2006, Comments 0 comments

PARIS, April 3, 2006 (AFP) - Shares in French telecom technology group Alcatel jumped 5.64 percent on Monday after a weekend announcement that it would acquire Lucent to form a global giant worth about US $33 billion dollars (EUR 27.5 billion).

PARIS, April 3, 2006 (AFP) - Shares in French telecom technology group Alcatel jumped 5.64 percent on Monday after a weekend announcement that it would acquire Lucent to form a global giant worth about US $33 billion dollars (EUR 27.5 billion).

Alcatel is about twice as big as Lucent. The agreement creates the second-biggest telecom technology group in the world, but only one quarter the size of the biggest, US group Cisco Systems capitalised at about US $133 billion dollars.

It is also seen as increasing pressure for a vast and imminent reorganisation of the European satellite technology business involving Alcatel and Thales of France and the European aerospace group EADS, the European Aeronautic, Defence and Space company.

Any agreement to consolidate European space activities, around Thales, has sensitive political implications, particularly in France and Germany, but an important step forward in the satellite negotiations is now expected this week and perhaps on Tuesday.

Thales has said that on Tuesday its board would examine an alliance with Alcatel and that it would leave the way open for EADS to play a part.

Alcatel and Lucent announced their marriage on Sunday, saying it would make available a larger product spread and boost market clout, taking advantage of their complementary activities in fixed and mobile-phone equipment.

Some analysts have also commented that it would strengthen them against competition from emerging countries, notably in Asia.

The companies said they expected to cut about 10 percent of their 88,000 combined workforce as they aim for EUR 1.4 billion a year of savings. Alcatel shares rose to EUR 13.49.

Alcatel is to hold about 60 percent of the capital of the new company, while Lucent will have about 40 percent.

The new group, to be based in Paris and quoted on the New York and Euronext stock exchanges, had a combined turnover of around EUR 21 billion for 2005, the statement said.

Cisco's annual sales are about US $28.5 billion or about 12 percent more than the Alctatel-Lucent combination.

The name of the new company was to be announced at a later date.

With Alcatel worth about US $20 billion and Lucent slightly less than US $13 billion, their combined capitalisation would be near US $33 billion — creating the world's second-biggest maker of equipment and networks for telephones and the Internet after Cisco Systems.

Copyright AFP

Subject: French news

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