PARIS/AMSTERDAM (Reuters)—French telecoms equipment provider Alcatel is in talks with its smaller U.S. rival Lucent Technologies to create a combine with sales of 21 billion euros ($25.33 billion), the companies said late on Thursday.
They broke off previous merger talks in 2001 after Lucent balked at the idea of an Alcatel takeover and they said on Thursday they were discussing a potential “merger of equals” that was intended to be priced at market, meaning with no premium on their stock prices.
Their merger would produce a company larger than Cisco Systems and would mark the latest round of consolidation in the telecoms and media sector as companies respond to the rapid conversion of technologies and the growth of “triple play,” the provision of TV, high-speed Internet and voice services over phone lines.
It would also give the two companies a combined market capitalization of more than 28 billion euros ($33.78 billion).
“The customer suggests what the vendor should do. Purchasing power comes with being big. And secondly there are always synergies to be made by combining operations,” Lucent Chief Operating Officer Frank d’Amelio told Reuters two weeks ago, when asked about mergers between equipment vendors.
The overnight news barely moved Alcatel shares at the opening of the Paris bourse but by 0824 GMT the stock was up by 4.75 percent at 13.45 euros.
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