Alcatel-Lucent: the mega merger has failed

The failure of negotiations has been announced during Tuesday’s night with a press release. Alcatel has also decided to restructure in order to face an economic slow down.

Discussions have failed and they are now over: this is what has been announced Tuesday’s night, by the two telecom giants, the French Alcatel and the American Lucent, in a press release diffused in Paris and in New York. The two groups have confirmed that they have been negotiating since May 18th in order to get closer and that negotiations have intensified during these days (see article "Fusion Alcatel-Lucent : une annonce attendue mardi"). The reason for the failure of the negotiations, which would have resulted in the birth of the world leader in the industry, have not been revealed.However, commentators thinks that the exchange offer, which would have been launched for an amount of 23 billion dollars, has failed because Lucent authorities, in the end, would have realised that it was not a merger any more but a real buyout of Lucent by Alcatel. The American managing team had nevertheless accepted that Alcatel would control 58% of the new group and that the board would be mainly composed of French directors.Alcatel’s board of directors, which happened on Tuesday’s night, has confirmed that negotiations have failed. They have also launched a large restructuring plan in order to face the economic slow down which goes on in the United-States and in some European countries. Thus they have decided to focus on operator market , with activities in optical and space networks which represent more than 80% of Alcatel’s telecom activities. The cable subsidiary Nexans will be listed on the stock exchange in June, the manufacturing of mobile phones will be outsourced. Alcatel’s board of directors has also decided to give 3 billion euros for exceptional depreciations (restructuring provisions, stoxk depreciations, depreciation of convertible bonds hold on the Canadian operator 360Networks, etc.). the marketplace which had punished when companies got closer, should appreciate this withdraw at the last minute.