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Alcatel, Lucent mull merger
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April 27, 2001: 2:00 p.m. ET
Report: French telecoms equipment company and Lucent discuss combining
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LONDON (CNN) - French telecom equipment company Alcatel has held preliminary talks with Lucent Technologies about a full merger, a report said on Friday.
Alcatel said on Thursday it had made a bid for Lucent's fiber-optic cable business but could end up with the whole company, The Wall Street Journal reported, citing people familiar with the matter.
With both Lucent (LU: Research, Estimates) and Alcatel (PCGE) each valued at about $35 billion, such a scenario is now financially plausible, the report said.
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Press reports describing the Alcatel-Lucent merger discussions are "pure speculation," an Alcatel official told CNN.
However, such talks are now off, industry sources told Reuters. Chances of a full-scale merger going through are slim because structuring the transaction could raise a host of issues, the WSJ said.
For instance, the shares of European bidders for U.S. companies have dropped in recent times when deals were announced, reducing the premium for the target companies' shareholders.
Lucent and Alcatel officials declined to comment on whether talks between the two have broadened beyond the bid for Lucent's fiber-optics unit, which could be valued at up to $8 billion.
A merger with Lucent would give Alcatel a big presence in North America where it's been trying to expand by buying smaller network equipment makers.
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For Lucent, a merger with Alcatel would solve operational and financial problems that have loomed over the company since mid-2000, the report said.
Lucent reported a fiscal second-quarter loss on Wednesday of $3.7 billion. Shares of the Murray Hill, N.J.-based company have dropped 83 percent in the last year. 
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