A French-American Merger

Presented by: Group3Cdr Rajesh SinhaDevashish MakhijaRajesh JainChetan Shrvastava

• Formed when AT&T spun off the systems and technology units, including Bell Laboratories in 1996.

• Leading source of new technologies – Bell Laboratories.

• Bell Laboratories played a pivotal role in inventing or perfecting key communications technologies like:

transistors, lasers and fiber-optic communications systems, the UNIX operating system, the C programming language and the C++ programming etc.

• Manufactures products used to build communications network infrastructure.

Lucent Background

• One of France's largest industrial companies With sales of EURO 13.1 billion and 58,000 employees in 2005.

• A leading global supplier of high-tech equipment for telecommunications networks.

• Manufactures core network switching and transmission systems for wireline and wireless networks (majority of its sales)

• Other communications products include cell phones, communications cable, and satellite equipment.

• Presence in more than 130 countries.

Alcatel Background

Revenues and net income, Alcatel, Ericsson, Lucent, Nortel, 1995-2006

Merger or Acquisition?

• Alcatel tried to acquire Lucent technologies in 2001.

• “Normally the toughest thing to negotiate in a corporate merger is the price. In Alcatel's failed effort to buy Lucent Technologies, the sticking point was pride.” – NY Times.

• In 2006, it was termed as merger of two equals, although the market cap. of Alcatel was 1.5 times than that of Lucent Technologies.

• After the deal in 2006, Alcatel shareholders own 60% in the new company while Lucent’s shareholders own 40%.

Merger Rationale

• Both companies had geographically diverse area of operation.

Merger Rationale

• A leading position in communications solutions, with the broadest wireless and wireline portfolio

• Access to premier R&D capabilities including Bell Labs which has 7 Nobel prize, more than 25000 active patents.

• An enhanced global foot print and diversified customer base with a presence in more than 130 countries.

How Merger was done?

• March 24, 2006 Alcatel and Lucent Technologies confirm they are engaged in discussions about a potential merger of equals.

• June 16, 2006 Alcatel and Lucent file for European antitrust approval. • Sept. 7, 2006 Shareowners of both companies vote to approve the propose

merger.• Nov. 17, 2006 Alcatel and Lucent announce they have received approval from

CFIUS to proceed with the proposed merger transaction.• Dec. 1, 2006 Alcatel-Lucent officially begins joint operations.• The newly formed French company Alcatel-Lucent issued approximately 878

million DRs to the former holders of Lucent common stock. Each outstanding share of Lucent common stock was converted into 0.1952 of an Alcatel-Lucent DR with each DR representing one ordinary share.

• The Bank of New York Mellon has been Alcatel’s depositary since 1997 and acted as Lucent Technologies’ transfer agent since 1996. In this transaction, the Bank acted as an exchange agent for the mandatory exchange of Lucent stock and provided Lucent shareholders with Alcatel-Lucent DRs.

Shareholders?

1. Merger/Exchange Details for Holders of AlcatelMerger/Exchange Field Data1 Merger/Exchange Date 12/1/062 Security Type Equity3 Original company Symbol ALA4 Original company Price per Share 13.285 New Company Security Type Equity6 New Company Symbol ALU7 Share Exchange Ratio 1

2. Merger/Exchange Details for Holders of LucentMerger/Exchange Field Data1 Merger/Exchange Date 12/1/062 Security Type Equity3 Original company Symbol LUAlcatel / Lucent Merger Page 3 of 74 Original company Price per Share 2.555 New Company Security Type Equity6 New Company Symbol ALU7 Share Exchange Ratio .1952

How employees were updated?

• Through e-mails from the local & global leadership team.• Feedbacks asked through pulse check surveys.• Through town hall meetings.

Failure or Success?

• Architects of Alcatel-Lucent merger resigned in 2008.

Mrs. Patricia Russo (rated 10th on Forbes list of most powerful woman in 2006) & Mr. Serge Tchuruk resigned in 2008 under mounting shareholder's pressure.

• Since the 2006 merger, the $27.5 billion company has posted six quarterly losses and has taken more than $4.5 billion in write downs, while its stock has plummeted 50% .

Failure or Success?

Failure or Success?

Failure or Success?

But with the arrival of new Chief executive Ben Verwaayen there is shift in strategy which is to become a "normal company," one with a "clear purpose“ that can earn a "fair return" for shareholders.

References:

• http://www.alcatel-lucent.com/wps/portal/belllabs

• http://annual-report.alcatel-lucent.com/

• http://www.alcatel-lucent.com/wps/portal/!ut/p/kcxml/04_Sj9SPykssy0xPLMnMz0vM0Y_QjzKLd4w3sfQGSYGYRq6m-pEoYgbxjgiRIH1vfV-P_NxU_QD9gtzQiHJHR0UAIZNI3w!!/delta/base64xml/L3dJdyEvd0ZNQUFzQUMvNElVRS82X0FfNUxJ

• http://en.wikipedia.org/wiki/Alcatel-Lucent

• http://www.nytimes.com/2008/07/29/business/worldbusiness/29iht-alcatel.4.14867263.html?pagewanted=2

• http://www.adl.com/uploads/tx_extthoughtleadership/ADL_Viewpoint_Telco_Suppliers.pdf