Lucent-Alcatel Merger Faces Homeland Security Wrinkle

[Flabbergasted]

http://www.telecomweb.com/news/1143580139.htm

The buzz surrounding the proposed merger of Lucent and Alcatel today turned to massive speculation over whether Lucent’s ownership of the fabled Bell Labs would prove an impediment to the deal because of the issue of foreign ownership of an operation that does a substantial amount of classified work for the U.S. government.

snip

As with the Dubai Ports World deal, a Lucent-Alcatel merger will most likely have to pass muster by the secretive Committee on Foreign Investment in the United States overseen by the U.S Department of the Treasury.

Although the Lucent-Alcatel deal is being billed as a “merger of equals,” (TelecomWeb news break, March 24), the fact is that some equals are more equal than others – and Alcatel is twice the size of Lucent. Thus, the feds might well look at the deal as an acquisition. One major difference between the Dubai Ports World deal and a Lucent-Alcatel merger is that Alcatel is not government owned (although the French government does own a small 4.8-percent stake in the company). On the other hand, many in the industry consider Bell Labs a more critical national-defense asset than the handful of freight terminals involved in the Dubai Ports World deal.

Indeed, there’s no clear picture of the full scope of the work Lucent is doing for the government, although some projects are well-known. Those include a $100 million contract to rebuild and modernize Iraq's communications system and a $242 million contract to modernize a U.S. Army network.

In any case, best guesses are that the Bell Labs issue will now be one of the items on the agenda when Alcatel’s board meets tomorrow to review progress on the Lucent-Alcatel talks (TelecomWeb news break, March 27).

[tocqueville]

1. same problem for Alcatel with French Thales, too sensitive.

the solution is to separate the "classified" companies from the merger.