PARIS and MURRAY HILL, New Jersey, April 2 /PRNewswire-FirstCall/
-- - Combined Company Will Have Strong Financial Base and Revenues
of Approximately Euro 21 Billion (USD 25 billion) Based on Calendar
2005 Results - Creates New Growth Opportunities and Identifies
Annual pre-tax Cost Synergies of Approximately Euro 1.4 Billion
(USD 1.7 billion) Within Three Years - Creates Global Convergence
Leader With Most Comprehensive Wireless, Wireline and Services
Portfolio in the Industry - Features one of the Largest Global
R&D Capabilities in Communications - Serge Tchuruk to be
Non-Executive Chairman, Patricia Russo to be CEO, Based in Paris;
Equal Board Representation From Both Companies in Merger of Equals
Alcatel (Paris: CGEP.PA and NYSE: ALA) and Lucent Technologies
(NYSE:LU) today announced that they have entered into a definitive
merger agreement to create the first truly global communications
solutions provider with the broadest wireless, wireline and
services portfolio in the industry. The primary driver of the
combination is to generate significant growth in revenues and
earnings based on the market opportunities for next-generation
networks, services and applications, while yielding significant
synergies. The combined company's increased scale, scope and global
capabilities will enhance its long-term value for shareowners,
customers and employees. The transaction, which was approved by the
boards of directors of both companies, will build upon the
complementary strengths of each company to create a global leader
in the transformation of next-generation wireless, wireline and
converged networks. Strategic Fit Creates Global Leader in
Next-Generation Networks and Services "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 capabilities
focused on communications, and employ the largest and most
experienced global services team in the industry. It will create
enhanced value for shareholders of both companies who will benefit
from owning the most dynamic, global player in the communications
industry." 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. The combination creates a new industry competitor with
the most comprehensive portfolio that will be poised to deliver
significant benefits to customers, shareowners and employees."
Overview of Strategic Combination The combined company, which will
be named at a later date, will have an aggregate market
capitalization of approximately Euro 30 billion (USD 36 billion),
based upon the closing prices on Friday, March 31. Based on
calendar 2005 sales, the combined company will have revenues of
approximately Euro 21 billion (USD 25 billion), divided almost
evenly among North America, Europe and the rest of the world. As of
December 31, 2005, the combined companies had about 88,000
employees. The combined company will have: - A strong financial
base and achieve annual pre-tax cost synergies of about Euro 1.4
billion (USD 1.7 billion) within three years, a substantial
majority of which is expected to be achieved in the first two years
- The largest and most experienced global services and support
organization in the industry - A leading position in communications
solutions, with the broadest wireless and wireline portfolio - Deep
and strong, long-term relationships with every major service
provider around the world - A growing momentum in high-end
enterprise technologies and markets, including mission critical
safety and security applications - The industry's premier R&D
capabilities, including Bell Labs, with 26,100 R&D engineers
and scientists throughout the world - An experienced international
management team with a common vision and proven track record - An
enhanced global foot print and diversified customer base with a
presence in more than 130 countries The cost synergies are expected
to be achieved within three years of closing and will come from
several areas, including consolidating support functions,
optimizing the supply chain and procurement structure, leveraging
R&D and services across a larger base, and reducing the
combined worldwide workforce by approximately 10 percent. The
merger also will result in approximately Euro 1.4 billion (USD 1.7
billion) in new cash restructuring charges, with the charges to be
recorded primarily in the first year. A substantial majority of the
restructuring is expected to be completed within 24 months after
closing. The transaction is expected to be accretive to earnings
per share in the first year post closing with synergies, excluding
restructuring charges and amortization of intangible assets. A
Globally Managed Company The combined company will be managed by a
team that reflects a balance between the two organizations, taking
into account the best talents of each company and the multicultural
nature of its workforce. Beginning immediately after closing, there
will be a Management Committee that will work towards this end,
while ensuring continuity in the management of the two companies.
This Management Committee of the combined company will be headed by
Patricia Russo, CEO, will also consist of Mike Quigley, COO; Frank
D'Amelio, Senior EVP, who will oversee the integration and the
operations ; Jean-Pascal Beaufret, CFO; Etienne Fouques, EVP, who
will supervise the emerging countries strategy; and Claire Pedini,
Senior VP, Human Resources. Additional organization and management
team announcements will be made at a future date. Between signing
and closing, Serge Tchuruk and Patricia Russo will supervise an
integration team to be nominated shortly, which will seek to ensure
that synergies will start to be realized as soon as closing takes
place. Overview of the Transaction Under the terms of the
agreement, Lucent shareowners will receive 0.1952 of an ADS
(American Depositary Share) representing ordinary shares of Alcatel
(as the combined company) for every common share of Lucent that
they currently hold. Upon completion of the merger, Alcatel
shareholders will own approximately 60 percent of the combined
company and Lucent shareholders will own approximately 40 percent
of the combined company. The combined company's ordinary shares
will continue to be traded on the Euronext Paris and the ADSs
representing ordinary shares will continue to be traded on the New
York Stock Exchange. The combined company created by this merger of
equals is incorporated in France, with executive offices located in
Paris. The North American operations will be based in New Jersey,
U.S.A., where global Bell Labs will remain headquartered. The board
of directors of the combined company will be composed of 14 members
and will have equal representation from each company, including
Tchuruk and Russo, five of Alcatel's current directors and five of
Lucent's current directors. The board will also include two new
independent European directors to be mutually agreed upon. The
combined company intends to form a separate, independent U.S.
subsidiary holding certain contracts with U.S. government agencies.
This subsidiary would be separately managed by a board, to be
composed of three independent U.S. citizens acceptable to the U.S.
government. This type of structure is routinely used to protect
certain government programs in the course of mergers involving a
non-U.S. party. The combined company will remain the industrial
partner of Thales and a key shareholder alongside the French state.
Directors to the Thales board who are nominated by the combined
company would be European Union citizens. Serge Tchuruk, or a
French director or a French corporate executive of the combined
company would be the principal liaison with Thales. Furthermore,
the board of Alcatel has approved the continuation of negotiations
with Thales with a view to reinforce the partnership through the
contribution of certain assets and an increased shareholding
position in Thales. The merger is subject to customary regulatory
and governmental reviews in the United States, Europe and
elsewhere, as well as the approval by shareholders of both
companies and other customary conditions. The transaction is
expected to be completed in six to twelve months. Until the merger
is completed, both companies will continue to operate their
businesses independently. Commitments to customers and stakeholders
"Our customers will benefit from a partner with the scale and scope
to design, build and manage increasingly converged networks that
deliver the most advanced communications services to the market.
That is what this combination will deliver with an unparalleled
focus on execution, innovation and service for our customers," said
Patricia Russo. "Serge and I will work hard with our leadership
team to draw upon the key strengths and common culture of technical
excellence within each company to uniquely position the combined
company for success, growth and value creation from next-generation
networking and services." "We are committed to moving forward
aggressively after closing and quickly combining our operations and
integrating our corporate cultures to ensure that we capture the
full benefits of this combination for our customers, our
shareowners and our employees," Serge Tchuruk said. "We share a
vision of where networks are going; a commitment to world-class
customer service; and a highly skilled, motivated and global
workforce. We are excited about the tremendous opportunity to
establish the course for this future together." About Alcatel
Alcatel provides communications solutions to telecommunication
carriers, Internet service providers and enterprises for delivery
of voice, data and video applications to their customers or
employees. Alcatel brings its leading position in fixed and mobile
broadband networks, applications and services, to help its partners
and customers build a user-centric broadband world. With sales of
EURO 13.1 billion and 58,000 employees in 2005, Alcatel operates in
more than 130 countries. For more information, visit Alcatel on the
Internet: http://www.alcatel.com/ Alcatel Press Contacts Regine
Coqueran Tel: +33(0)1-40-76-49-24 Mark Burnworth Tel:
+33(0)-40-76-50-84 Alcatel Investor Relations Pascal Bantegnie Tel:
+33(0)1-40-76-52-20 Nicolas Leyssieux Tel: +33(0)1-40-76-37-32
Maria Alcon Tel: +33(0)1-40-76-15-17 Charlotte Laurent-Ottomane
Tel: +1-703-668-7016 About Lucent Lucent designs and delivers the
systems, services and software that drive next-generation
communications networks. Backed by Bell Labs research and
development, Lucent uses its strengths in mobility, optical,
software, data and voice networking technologies, as well as
services, to create new revenue-generating opportunities for its
customers, while enabling them to quickly deploy and better manage
their networks. Lucent's customer base includes communications
service providers, governments and enterprises worldwide. For more
information on Lucent, which has headquarters in Murray Hill, N.J.,
U.S.A., visit http://www.lucent.com/. Lucent Press Contacts Bill
Price Tel :+1-908-582-4820 Joan Campion Tel :+1-908-582-5832 Lucent
Investor Relations John DeBono Tel : +1-908-582-7793 Dina Fede Tel
: +1-908-582-0366 Legal and Financial Advisors Alcatel's financial
advisors on this transaction were Goldman Sachs, with Skadden,
Arps, Slate, Meagher & Flom LLP as legal counsel. Lucent's
financial advisors were JPMorgan and Morgan Stanley and Wachtell,
Lipton, Rosen & Katz as legal counsel Note to Editors: A global
media and analysts/investors conference call will be held today at
5 p.m., Paris time (11 a.m. Eastern time) with Serge Tchuruk and
Patricia Russo. The conference will be available via a live webcast
at http://www.alcatel.com/conferences or http://www.lucent.com/. An
in-person press conference will be held tomorrow in Paris at 1
p.m., Paris time (7 a.m., Eastern Time) with Serge Tchuruk and
Patricia Russo. The conference will also be available via a live
webcast at http://www.alcatel.com/conferences or
http://www.lucent.com/. An in-person conference for
analysts/investors will be held tomorrow in Paris, at 3 p.m., Paris
time (9 a.m., Eastern time). The conference will also be available
via a live webcast at http://www.alcatel.com/conferences or
http://www.lucent.com/. Replays of the webcast will be available
via the same Web addresses. SAFE HARBOR FOR FORWARD LOOKING
STATEMENTS This press release contains statements regarding the
proposed transaction between Lucent and Alcatel, the expected
timetable for completing the transaction, future financial and
operating results, benefits and synergies of the proposed
transaction and other statements about Lucent and Alcatel's
managements' future expectations, beliefs, goals, plans or
prospects that are based on current expectations, estimates,
forecasts and projections about Lucent and Alcatel and the combined
company, as well as Lucent's and Alcatel's and the combined
company's future performance and the industries in which Lucent and
Alcatel operate and the combined company will operate, in addition
to managements' assumptions. These statements constitute
forward-looking statements within the meaning of the U.S. Private
Securities Litigation Reform Act of 1995. Words such as "expects,"
"anticipates," "targets," "goals," "projects," "intends," "plans,"
"believes," "seeks," "estimates," variations of such words and
similar expressions are intended to identify such forward-looking
statements which are not statements of historical facts. These
forward-looking statements are not guarantees of future performance
and involve certain risks, uncertainties and assumptions that are
difficult to assess. Therefore, actual outcomes and results may
differ materially from what is expressed or forecasted in such
forward-looking statements. These risks and uncertainties are based
upon a number of important factors including, among others: the
ability to consummate the proposed transaction; difficulties and
delays in obtaining regulatory approvals for the proposed
transaction; difficulties and delays in achieving synergies and
cost savings; potential difficulties in meeting conditions set
forth in the definitive merger agreement entered into by Lucent and
Alcatel; fluctuations in the telecommunications market; the
pricing, cost and other risks inherent in long-term sales
agreements; exposure to the credit risk of customers; reliance on a
limited number of contract manufacturers to supply products we
sell; the social, political and economic risks of our respective
global operations; the costs and risks associated with pension and
postretirement benefit obligations; the complexity of products
sold; changes to existing regulations or technical standards;
existing and future litigation; difficulties and costs in
protecting intellectual property rights and exposure to
infringement claims by others; and compliance with environmental,
health and safety laws. For a more complete list and description of
such risks and uncertainties, refer to Lucent's Form 10-K for the
year ended September 30, 2005 and Alcatel's Form 20-F for the year
ended December 31, 2005 as well as other filings by Lucent and
Alcatel with the US Securities and Exchange Commission. Except as
required under the US federal securities laws and the rules and
regulations of the US Securities and Exchange Commission, Lucent
and Alcatel disclaim any intention or obligation to update any
forward-looking statements after the distribution of this press
release, whether as a result of new information, future events,
developments, changes in assumptions or otherwise. IMPORTANT
ADDITIONAL INFORMATION WILL BE FILED WITH THE SEC In connection
with the proposed transaction, Alcatel and Lucent intend to file
relevant materials with the Securities and Exchange Commission (the
"SEC"), including the filing by Alcatel with the SEC of a
Registration Statement on Form F-6 and a Registration Statement on
Form F-4 (collectively, the "Registration Statements"), which will
include a preliminary prospectus, a final prospectus and related
materials to register the Alcatel American Depositary Shares
("ADSs"), as well as the Alcatel ordinary shares underlying such
Alcatel ADSs, to be issued in exchange for Lucent common shares,
and Lucent and Alcatel plan to file with the SEC and mail to
security holders a Proxy Statement/Prospectus relating to the
proposed transaction. The Registration Statements and the Proxy
Statement/Prospectus will contain important information about
Lucent, Alcatel, the transaction and related matters. Investors and
security holders are urged to read the Registration Statements and
the Proxy Statement/Prospectus carefully when they are available.
Investors and security holders will be able to obtain free copies
of the Registration Statements and the Information Statement/Proxy
Statement/Prospectus and other documents filed with the SEC by
Lucent and Alcatel through the web site maintained by the SEC at
http://www.sec.gov/. In addition, investors and security holders
will be able to obtain free copies of the Registration Statements
and the Information Statement/Proxy Statement/Prospectus when they
become available from Lucent by contacting Investor Relations at
http://www.lucent.com/, by mail to 600 Mountain Avenue, Murray
Hill, New Jersey 07974 or by telephone at [908-582-8500] and from
Alcatel by contacting Investor Relations at
http://www.alcatel.com/, by mail to [54, rue La Boetie, 75008
Paris, France] or by telephone at [+33-1-40-76-10-10]. Lucent and
its directors and executive officers also may be deemed to be
participants in the solicitation of proxies from the stockholders
of Lucent in connection with the transaction described herein.
Information regarding the special interests of these directors and
executive officers in the transaction described herein will be
included in the Proxy Statement/Prospectus described above.
Additional information regarding these directors and executive
officers is also included in Lucent's proxy statement for its 2006
Annual Meeting of Stockholders, which was filed with the SEC on or
about January 3, 2006. This document is available free of charge at
the SEC's web site at http://www.sec.gov/ and from Lucent by
contacting Investor Relations at http://www.lucent.com/, by mail to
600 Mountain Avenue, Murray Hill, New Jersey 07974 or by telephone
at [+1-908-582-8500]. Alcatel and its directors and executive
officers may be deemed to be participants in the solicitation of
proxies from the stockholders of Lucent in connection with the
transaction described herein. Information regarding the special
interests of these directors and executive officers in the
transaction described herein will be included in the Proxy
Statement/Prospectus described above. Additional information
regarding these directors and executive officers is also included
in Alcatel's information statements for its 2005 Assemblee Generale
Mixte Ordinaire Et Extraordinaire. These documents are available
from Alcatel by contacting Investor Relations at
http://www.alcatel.com/, by mail to 54, rue La Boetie, 75008 Paris,
France or by telephone at +33-1-40-76-10-10. DATASOURCE: Alcatel
CONTACT: Regine Coqueran, Tel: +33(0)1-40-76-49-24, ; Mark
Burnworth, Tel: +33(0)-40-76-50-84, ; Alcatel Investor Relations;
Pascal Bantegnie, Tel: +33(0)1-40-76-52-20, ; Nicolas Leyssieux,
Tel: +33(0)1-40-76-37-32, ; Maria Alcon, Tel: +33(0)1-40-76-15-17,
Charlotte Laurent-Ottomane Tel: +1-703-668-7016, ; Lucent Press
Contacts, Bill Price, Tel :+1-908-582-4820, , Joan Campion, Tel
:+1-908-582-5832, ; Lucent Investor Relations, John DeBono, Tel :
+1-908-582-7793, , Dina Fede, Tel : +1-908-582-0366,
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