Lucent, Alcatel halt merger plans
USA Today
NEW YORK — Lucent Technologies and French telecommunications equipment rival Alcatel broke off merger talks yesterday in an embarrassing 11th-hour about-face that leaves Lucent's future in doubt.
Associated Press
Negotiations collapsed midday after Lucent's board rejected the terms of the
Lucent CEO Henry Schacht balked at giving up control.
$22 billion deal. In a phone conversation shortly after, Henry Schacht, Lucent's chief executive officer, told Alcatel CEO Serge Tchuruk that Lucent felt forced to back out because the deal was looking more like a takeover than a merger of equals.
People who took part in the final negotiations outside Paris over the weekend said that both chief executives had signed off on a press release and slide presentation for Wall Street analysts that outlined a 58 percent-42 percent ownership split in favor of the larger Alcatel and a no-premium all-share deal that would leave Tchuruk as CEO and Schacht as nonexecutive vice-chairman of the combined group. But Schacht, who initiated the merger negotiations four weeks ago, had second thoughts about giving up control to the French and bailed out.
Deals rarely collapse at such a late stage, but it isn't unprecedented. In September, Coca-Cola abandoned its much-anticipated $16 billion plan to buy Quaker Oats and its Gatorade sports drink brand, opening the door for rival Pepsi to do the deal instead.
The list of potential predators in Lucent's case appears to be very small.
Instead of creating the world's largest telecommunications equipment vendor, Lucent must now find a way to turn itself around amid a sharp spending downturn by customers.
Lucent, which has been the focus of bankruptcy rumors and whose shares are off more than 87 percent since July 2000, must raise money to balance its books and still hopes to sell its fiber-optic division, which initially got Alcatel and Lucent talking.
Pirelli of Italy is now seen as the lead bidder.
Lucent is not commenting on whether it will seek other partners. But the company says it plans to carry out a restructuring plan it announced in January.
