Alcantel-Lucent Merger

In: Business and Management

Submitted By theary
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The Alcatel-Lucent Merger – What went wrong?

Summary

• The original merger negotiations between Alcatel of France, a communications equipment maker based in Paris and Lucent Technologies, a U.S. telecommunications giant, took place in 2001.

• The original deal collapse on May 29, 2001, after the two companies could not agree on how much control Alcatel would have. Lucent's executives wanted the deal as a "merger of equals" rather than a takeover by Alcatel.

• In 2006, renewed negotiations took place again and in April 2006, Alcatel's chief executive, Serge Tchuruk agreed to pay 10.6 billion euro ($13.5 billion then) for Lucent. This deal was to create the world's biggest telephone equipment maker.

• An Alcatel-Lucent merger provided the combined company a strong position in several categories of equipment sold to the major telecommunications carrier: wireless telecommunications equipment, wireline equipment, wireless infrastructure, Internet routers and equipment for carrying calls over the Internet, etc.

• After the merger during July 2008, corporate culture of Alcatel and Lucent clashed. The U.S. Company could not adopt Alcatel's French business model and vice versa leading to the resignation of Alcatel-Lucent CEO Patricia Russo and later Serge Tchuruk's resignation.

• Mr. Tchuruk and Ms. Russo both struggled to bring together the vastly different cultures of the two companies especially during tough business climates.

• In September 2008 the new chiefs were announced, a French Chairman who lives in the U.S. and a Dutch chief executive, who will be based in Paris. Both Phillippe Camus and Ben Verwaayen were considered to have the personalities and experience that could iron out the companies' cultural clashes and problems.

Questions

1) Discuss conditions and factors that pushed forth the 2006 merger that…...

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