Lucent and Alcatel have called off their merger talks, the pair announced today in a terse but cordial joint statement.

But why? It appears that Lucent was worried that the deal would be perceived as a takeover, rather than a merger, according to sources cited by WSJ.com. Also, Lucent wanted a stronger representation in an enlarged board.

So the sticking point for what was to be a $23bn nil deal comes down to vanity. Of course it was a takeover. Alcatel, the smaller of the two, would have been in the driving seat - and deservedly so, considering the cash-crunching mess-up on the pavement created by Lucent's management.

Alcatel's shareholders will possibly relieved that the company failed to ensnare Lucent.

It's all too easy to see the problems that could have arisen from trying to consolidate two very big companies with two very different cultures while pretending that both sides were in charge. However, this was a big chance for Alcatel to storm into the very top tier. Oh well, there's always Nortel.

But whither Lucent? The company's overriding need is for quick-fix cash to pay back its huge debt. Alcatel's nil-premium share offer was not that quick fix - which means it will be easy enough to pacify shareholders and debtholders. Their immediate needs will be served - in common with Xerox and BT debtholders - by business unit sales at, so long as it's cash, at knockdown prices. The upshot is that Lucent is not in the business, right now, of getting bigger. ®