PARIS – With a week to go before a crucial vote on a deal that would redraw the landscape of the telecommunications equipment industry, Alcatel on Wednesday rebutted criticism from a French investment advisory group about its planned takeover of Lucent and insisted that the deal would be good for shareholders.
«Alcatel’s management continues to get support,» said Mark Burnworth, a spokesman for Alcatel, adding that it was making «excellent progress toward the successful completion of the merger.»
Proxinvest, a French shareholder adviser, has urged investors to vote against Alcatel’s purchase of Lucent in what some analysts said could be an unprecedented effort to rein in a French chief executive’s adventures abroad.
«Usually French companies are stopping foreigners from making purchases at home, but this looks like a French revolt against their executives’ strategies overseas,» said Per Lindberg, an analyst with the investment bank Dresdner Kleinwort in London. «If the French scupper this deal, then this event could be a trendsetter.»
Lindberg said that Proxinvest appeared to have support from some major investors in France, but he did not identify them.
Serge Tchuruk, chief executive of Alcatel, struck the deal with Lucent in April. It would create the world’s biggest telephone-equipment maker, and the French telecommunications company would pay about $13.5 billion. But Lucent has continued its weak performance since the bursting of the technology bubble early this decade. Even so, the initial reaction from analysts to Alcatel’s plans for the merger was broadly positive.
The deal, analysts said, would combine the growing reach of Alcatel in developing-world markets and its leadership in broadband equipment, fiber- optic networks and Internet television with Lucent’s strength in the wireless equipment market in the United States, where Alcatel is seeking growth.
But Proxinvest this week said that the takeover in its current form was too expensive for Alcatel shareholders and skewed too far in favor of Tchuruk, who would become chairman of a combined Alcatel Lucent.
«This is a very, very expensive deal for Alcatel shareholders,» said Pierre- Henri Leroy, the president of Proxinvest. Leroy was particularly concerned that the deal allowed Tchuruk, 68, to stay on past normal retirement age and that the conditions of the deal made it too difficult to remove him.
Leroy said Lucent should hand over seven shares for each Alcatel share as part of any deal – rather than five shares under the current arrangements. Alternatively, Leroy said, Alcatel should drop plans to merge with Lucent and return to an earlier plan to appoint Mike Quigley, who is now the company’s chief operating officer, to succeed Tchuruk as chief executive. Under the merger, the chief executive of Lucent, Patricia Russo, would become the chief executive of the merged company.
Burnworth, the Alcatel spokesman, said the arrangements for Tchuruk were «indispensable to guarantee a stability of the management team during the three-year transition period right after the merger.»
On Wednesday, Lindberg, the analyst with Dresdner, said that investors had sent Alcatel’s stock 3.9 percent higher on signs that the deal might not go through after all. But Sandeep Malhotra, an analyst at Merrill Lynch in London, strongly disagreed with that analysis.
Malhotra said Alcatel’s stock was up largely because his own bank had issued a «buy» recommendation early Tuesday and had called on investors to vote in favor of the deal at an extraordinary general meeting to be held Sept. 7.
Malhotra, whose bank owns Alcatel stock, also said that corporate governance at Alcatel should not be a matter for concern among shareholders.
«You could herald Tchuruk as a leader for catalyzing industry consolidation,» Malhotra said.
Fuente: International Herald Tribune, James Kanter
