French communications equipment giant Alcatel and Lucent Technologies, the biggest U.S.-based telephone equipment maker, unveiled a $13.4 billion stock swap merger that will give the combined company annual sales of about $25 billion.
That will enable it to surpass Sweden-based Ericsson to become the No. 2 maker of computer-networking gear in the world behind Cisco Systems of the U.S.
The combined company – which has yet to unveil a name – will have a market valuation pegged at $36 billion. About 8,800 jobs, or 10 percent of the combined work force, will be cut after the merger.
Bell Laboratories, Lucent’s fabled research arm from its days as part of the old AT&T, will remain at the company’s Murray Hill, N.J., headquarters and will serve as the North American headquarters of the combined entity, the companies said.
Lucent pledged that any job cuts would be “fair and balanced” across the various business sectors in the new far-flung corporation.
The world headquarters of the new company, however, will be in Paris, where Alcatel is currently based. Lucent CEO Patricia Russo will serve as the CEO of the combined company.
“The primary drive of the combination is to generate significant growth in revenues and earnings based on the market opportunities for next generation networks, service and applications,” the companies said in a statement.
The deal gives Alcatel access to two key Lucent customers, Cingular Wireless and Verizon Wireless, the two largest mobile-phone companies.
The companies disclosed 10 days ago that they were in talks and their stock prices have been moving up on the news.
With Post wire services