US government clears Alcatel-Lucent deal

President George Bush and a U.S. security panel won't block the Alcatel-Lucent merger, apparently clearing the deal to go forward.

U.S. President George Bush has accepted a recommendation that he not suspend or prohibit the planned merger of Alcatel SA and Lucent Technologies Inc. on security grounds after an agency that oversees foreign investment said the deal should be allowed, apparently clearing it to go forward.

The companies announced in April they would merge, creating a giant communications equipment vendor that would be based in Paris. The deal faced scrutiny on both sides of the Atlantic, partly because both companies have sensitive government contracts related to national security. Approval by the U.S. Committee on Foreign Investment in the U.S. (CFIUS), an inter-agency panel led by the Secretary of the Treasury, was to be the last hurdle to the deal, according to the companies. Members of Congress held a hearing on the deal earlier this week.

On Friday, Bush accepted the recommendation of CFIUS that he not block or suspend the merger, which he is allowed to do under a 1950 law governing foreign investments, according to a White House statement. As a condition, the companies have to carry out agreements they have made with U.S. government agencies, the statement said.

Lucent has agreed to form a subsidiary run by U.S. citizens to perform sensitive research and development work for the government. In addition, Alcatel has agreed to sell its satellite business to allay national security concerns in France.

Earlier this year, the proposed acquisition of operations at several U.S. ports by London-based Dubai Ports World created a political firestorm fueled by security concerns.

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