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Alcatel in ‘advanced talks’ to buy Lucent

$40bn deal on the cards

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France's Alcatel has inched nearer to its buyout of Lucent Technologies, a deal now worth more than $40 billion.

That's according to the New York Times, which today reports that the two are in "advanced talks" over the deal, which will be almost a total stock agreement.

The agreement would represent a 20 per cent premium over telecoms equipment maker Lucent's current $33.5 billion value.

The talks between the telecom equipment giants have been going on for more than a month, but have now reached a crucial stage, executives close to the discussions told the newspaper. A decision as to whether the companies will get as far as proceeding with "normal negotiations" is expected within the next week.

The agreement could be announced as early as the start of June - and the odds of the deal going ahead were said to be 50-50.

The situation has sprung from Alcatel's original talks with Lucent to buy its fibre-optic cable business - Lucent was hoping to shift this for more than $5 billion to shake off some of its debts. Alcatel would still be interested in this part of the business if it does not manage to buy the whole of Lucent, the NYT reports.

Lucent has seen its share price take a battering over the last 18 months due to managerial and sales problems. At its high in December 1999 it was $79.58. This afternoon its share price was up 6.6 per cent at $10.46.

"Alcatel would inherit a lot of headaches," James Kelleher, an Argus Research analyst, was quoted as saying. "It's not entirely clear if the gain outweighs the pain." ®

Related Link

New York Times article

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