Alcatel Buying Lucent Technologies

Alcatel is planning to buy the rival Lucent Technologies creating World's largest telecom equipment supplier with combined sales volume of $25.33 billion.

The talks revive the negotations that sparked off five years ago and fell over due to issues with structuring of the new company. This time, the 2 companies are talking about a "merger of equals" that would be "priced at market". Lucent chief Patricia Russo is likely to become the CEO when Alcatel chief Serge Tchuruk retires in June.

Pressure had been mounting on telecom equipment majors after the consolidation of telephone service providers that buy the gear. Major customers like AT&T have already been consolidating, with the latest move being the $64.5 billion AT&T bid for BellSouth; Cisco agreed in November to buy Scientific-Atlanta Inc. for $6.9 billion to enter the growing market of Internet TV.

After the merger talks, share prices of Alcatel & Lucent jumped to $3.05/share, 13.14 euros/share respectively.

Alcatel has a market value of $21.9 billion, and Lucent, the largest U.S. maker of phone equipment, is valued at $12.6 billion, based on closing prices yesterday. Their combination would produce a company with sales larger than the market leader, Cisco Systems taking telecom mergers to almost $200 billion in the past 18 months.