By Robin Gareiss, Executive Vice President & Sr. Founding Partner, Nemertes Research Inc.
April 7, 2006

Despite inherent problems that often accompany mergers, the much-anticipated marriage of Alcatel SA and Lucent Technologies Inc. (NYSE-LU) is a smart move. The deal, announced this week, will result in some solid technology and geographic coverage benefits, but not without some challenges. It also reflects the continued consolidation in the communications equipment market.

Dubbed a “merger of equals,” Alcatel shareholders will own 60% of the company, and Lucent shareholders will own 40%. The combined $25 billion company, to be named later, will be based in Paris and headed by Lucent’s CEO, Patricia Russo. Challenge No. 1 will be to truly run the integration as a “merger of equals”
when, in fact, Alcatel is more heavily weighted.

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