Alcatel and Lucent officially merging

[Barry]

The merger between Alcatel and Lucent is officially moving forward with Lucent’s chief executive, Pat Russo, set to lead the yet-to-be-named Paris-based telecom giant, the companies said.

Alcatel’s Mike Quigley, corporate operations officer, will be part of a multicultural management committee the companies plan to create to help balance the two organizations.

The companies said cost synergies will emerge within three years of the closing and will come from consolidating support functions, optimizing the supply chain and procurement structure, and leveraging research and development across a larger base. The companies also announced they will reduce their combined worldwide workforce by approximately 10 percent. At the close of last year there were a total of approximately 88,000 employees working for Lucent and Alcatel.

The combined entity will have revenues of about $25 billion, divided almost evenly among North America, Europe and the rest of the world, said the companies. Upon completion of the merger, expected to close by October, Alcatel shareholders will own around 60 percent of the combined company, while Lucent shareholders will own about 40 percent.

To deal with the sensitive research and development work that Lucent’s Bell Labs handles for the U.S. government, the company said it will create a separate subsidiary to manage the business. The company said it will nominate William Perry, former Secretary of Defense; James Woolsey, former director of Central Intelligence; and Kenneth Minihan, former director of the National Security Agency, for board positions with the subsidiary.

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