Alcatel-Lucent Not Anticompetitive, Though
By PHYLLIS PLITCH and RIVA RICHMOND
Of DOW JONES NEWSWIRES
NEW YORK -- Any deal between Lucent Technologies Inc. (LU)
and France's Alcatel SA (ALA) would have to overcome internal
obstacles, but at least such a combination would probably be
safe from antitrust regulators, experts said.
The two telecommunications equipment makers are reportedly
in advance talks about a potential combination, according to a
story in Friday's New York Times. The newspaper reported that
Alcatel could make a bid to buy Lucent, Murray Hill, N.J., for
slightly more than $40 billion, almost entirely in stock, or a
20% premium. However, CNBC reported that the deal would more
likely be a merger of equals with no price premium, and others
have said it's more likely that Alcatel would do better to
pursue a strategy of bidding only for Lucent's optical fiber
business, which the French company has already admitted an
Lucent officials Friday declined to comment.
Should a full-blown deal emerge, Garret Rasmussen, an
antitrust lawyer at the Washington, D.C., firm Patton Boggs,
doesn't think there would be any serious antitrust concerns on
the part of U.S. regulators. Indeed, given Lucent's problems,
anything that would strengthen its presence in the U.S. would
likely be seen as a positive.
"Lucent has experienced considerable trouble recently and
its stock has plummeted, and there have been rumors of
bankruptcy," he said. "Anything done to revive Lucent would be
pro-competitive. Anything that increases Lucent's competitive
vigor is pro-competitive."
Furthermore, such a deal would be well-received by the Bush
administration, which is perceived to be business friendly.
"They will be much more receptive to mergers that lead to
significant efficiencies, and I think this is a merger that
would lead to significant efficiencies. They have
complementary strengths," Rasmussen said.
Alcatel, and its investors, however, may be wary of taking
on Lucent, which has posted steep losses, is cash-short and
lacks a clear path to recovery. As such, investors may balk
paying too steep a price for such a troubled company. In other
words, the troubles that Rasmussen refers to as helping to
clear any regulatory hurdles are the same ones that might make
Alcatel or its shareholders shy away from making an offer.
economics professor at New York University, saw no issues that
could derail a deal, but said regulators might push the
companies, which both sell traditional network equipment to
telecommunications carriers, to sell individual assets in some
Alcatel would use Lucent to gain greater access to the U.S.
Canada's Nortel Networks Corp. (NT) and Corning Inc. (GLW),
Corning, N.Y., meanwhile, have been dismissed as candidates to
buy Lucent, because they are direct competitors in the U.S.
market and would present antitrust concerns.
The fact that one party is European could also help smooth
any European regulator concerns. "The European Union tends to
be a bit 'peculiar,' let's say, with American companies,"
Economides said, referring
to European sensitivities about American encroachment on their
-Phyllis Plitch, Dow Jones Newswires, 201-938-2357
-By Riva Richmond, Dow Jones Newswires, 201-938-5670
Briefing Book for: ALA | F.ALC | GLW | LU | NT | T.NT