Shareholders of Alcatel and Lucent Technologies approved the companies' merger plans Thursday, clearing one of the last hurdles to a mammoth consolidation in the communications equipment business.
The merger scraped by at Lucent's special shareholder meeting Thursday. It required 50 percent of the vote and received 51.97 per cent, according to spokesman John Skalko. Alcatel, meeting in Paris, required a two-thirds vote of shareholders. All resolutions related to the merger were approved by at least 85 percent of the Alcatel shareholders who voted, said Alcatel spokesman Charlie Guyer.
The two networking and telecommunications equipment manufacturers announced their intention to merge in April. The combined entity will have annual revenue of around Euro 21 billion, based on the companies' 2005 financial results.
Lucent Chief Executive Officer Patricia Russo will become CEO of the combined company, which is to be called Alcatel Lucent, while Alcatel CEO Serge Tchuruk will become a non-executive chairman. While Lucent is incorporated in the US, the merged company will be based in Paris, Alcatel's hometown.
Alcatel and Lucent expect that the merged entity will make annual cost savings of about Euro 1.4 billion, around half of that from job cuts. They plan to cut 9,000 from their combined payroll of 88,000.
The U.S. Federal Trade Commission approved the deal in June, and the European Commission gave its consent in July.
The largest remaining obstacle is convincing the Committee on Foreign Investment in the U.S. that the deal presents no threat to national security. To allay such fears, Lucent will set up a separate subsidiary run by U.S. citizens to handle sensitive research and development work for the U.S. government, while in France, Alcatel agreed to sell its satellite business to French aerospace electronics group Thales SA for similar reasons.
The proposed deal has run into opposition from some investment companies and shareholders. Lucent announced on Friday it had settled two shareholder lawsuits that could have delayed Thursday's vote. Shares of both companies have fallen from their April levels, though they have made some gains in the past few weeks.