Lucent, Alcatel in $33 billion Merger Talks

Will they or won’t they? France-based Alcatel and N.J.-based Lucent, both major providers of telecommunications equipment, are in merger talks again — this time to the tune of $33 billion.

When we last left our erstwhile couple, they had abandoned the altar and a $23.5 billion merger back in 2001 over disagreements of who would wear the pants in the family. This time around, the two telecommunications companies are talking about a “merger of equals” priced at market. The move would definitely be beneficial for Alcatel; merging with Lucent, Alcatel would have better access to communication carriers in the U.S. market. Lucent would benefit from uniting with a company with a decided technological advantage.

Still, industry watchers are having a tough time seeing how, exactly, the two companies will be able to achieve this “merger of equals.” In the intervening five years, Alcatel has beefed up its technological infrastructure; Lucent, on the other hand, has struggled financially, resorting to waves of layoffs. Lucent does benefit from still being the leading U.S. provider of wireless networking gear. Jeffries International, a New York-based investment firm, bidding adieu to any invitation to the wedding, told Market Watch, “We believe a merger between Alcatel and Lucent carries the same clunky rationale as when it was first attempted in 2001, industry consolidation at the expense of inevitable disruption.”

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