From Bloomberg this morning:
Shares of Alcatel SA, the world's biggest maker of broadband Internet equipment, rose as much as 8.2 percent after the company agreed to buy Lucent Technologies Inc. in a $13.4 billion share swap.
There's a phrase in the City (London): a deal is never done until the money has changed hands. Nowhere might that phrase be possibly more relevant than in telecoms right now. I'm not a cynic, but something tells me this announcement over the Lucent-Alcatel merger is a little premature. I can just see something going wrong and stalling up this merger at the 11th hour, most likely from Alcatel's camp.
Take a look at the timeline of the deal, and it starts to look suspiciously quick and Lucent-driven: first of all, Lucent was supposed to be clearing problems over potential security leaks from its Bell Labs division with the U.S. government only last week. This is usually a bureaucratic process that takes weeks, not 48 hours. Initially this was supposed to be a buyout, too, but by Thursday — again last week — this was now apparenty a merger. And now, as if all that wasn't enough, the proposed CEO of the combined telecoms giant is not anyone from Alcatel, but Lucent's own Patricia Russo. Alcatel is 40% larger than NASDAQ-listed Lucent Technology. Strangely, it hasn't been Alcatel making announcements of the buy-out (until today's Bloomberg report) but again, Lucent. I'm not surprised either: the company is coming out of this with the sweetest deal it could hope for.
Something tells me Lucent — the company getting bought out — has been pushing this a little too hard, and classicly in such cases, the purchasing company is going to get buyer's nerves right before the hand-over of real currency, and if it's not Alcatel itself, I can see French government bureaucrats getting on board.
If not, Alcatel should heed the warning in the title of this piece, or they may find they don't have much of a company left after their acquisition.