Lucent and Alcatel agree to merge

3 Apr 2006

Communications equipment industry giants Lucent and Alcatel have agreed to merge, creating in the process a juggernaut with revenues of €21bn a year.

This morning Lucent said that the merger was motivated by a desire by both companies to generate significant growth in revenues and earnings based on the market opportunities for next-generation networks, services and applications while yielding significant synergies.

“This combination is about a strategic fit between two experienced and well-respected global communications leaders who together will become the global leader in convergence,” said Serge Tchuruk, chairman and CEO of Alcatel who will become non-executive chairman of the combined company.

“A combined Alcatel and Lucent will be global in scale, have clear leadership in the areas that will define next-generation networks, boast one of the largest research and development (R&D) capabilities focused on communications and employ the largest and most experienced global services team in the industry,” Tchuruk added.

Patricia Russo, chairman and CEO of Lucent who will become CEO of the combined company, said: “The strategic logic driving this transaction is compelling. The communications industry is at the beginning of a significant transformation of network technologies, applications and services — one that is projected to enable converged services across service-provider networks, enterprise networks and an array of personal devices. This presents extraordinary opportunities for our combined company to accelerate its growth.”

It is understood that the new company, which will be given a new name at a later date, will have a market capitalisation of about €30bn and annual revenues of around €21bn.

In terms of R&D the new company, which includes Lucent Bell Labs, will have some 26,100 R&D engineers and scientists throughout the world.

Exactly a year ago Lucent Technologies Bell Labs opened a €43m research facility in Blanchardstown that aims to harness Irish science and engineering talent while undertaking leading-edge telecommunications research. Bell Labs Ireland plans to employ 40 researchers focussing on a range of supply chain management and product development technologies. Researchers there will work in partnership with nine leading Irish universities and technical institutes in achieving their goals.

The lab is part of a €69m investment package announced by the Government two years ago that has also seen the creation of a cross-university telecommunications research facility, the Centre for Telecommunications Value-Chain Research (CTVR) based at Trinity College Dublin. The Bell Labs facility accounts for more than €43m of the total investment and is being jointly funded by Bell Labs and IDA Ireland, while the CTVR is being funded by Science Foundation Ireland as part of its ambitious Centre for Science Engineering and Technology programme.

By John Kennedy