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GEC and Alcatel plan £30 billion merger

They've some things in common, but it looks a remarkably bad fit

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The UK's General Electric Company (GEC) and France's Alcatel are considering a £30 billion merger, according to a report in yesterday's Sunday Times. Merger negotiations have come out of partnership talks the companies have had over the past few months, according to the report. But although the two companies have a certain amount in common, in other areas they seem more likely to clash than complement. From GEC's perspective a deal would strengthen links between its defence electronics arm, Marconi, and Thomson-CSF, the French defence group in which Alcatel has a 16 per cent stake. But as one of the possible areas of 'co-operation' said to have been considered was the sale of GEC's telecoms equipment business to Alcatel, the two don't necessarily both want to stay in the areas they have in common. Register factoid: GEC's telecoms business was formerly known as GPT, which is rude when pronounced in French. Alcatel is also investing heavily in the Internet, in wireless, in satellite, and in personal communicator-style products, and none of these seem of much direct interest to GEC. The British company, on the other hand, has a long history of financial wheeling and dealing, and that might be what's attracting it to a possible deal. Some form of merger followed by de-merger, leaving one GEC-style business and one or more consumer/networking operation? GEC would no doubt like that, but would Alcatel? And indeed, would the French government? ®

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