Alcatel-Lucent finalizes merger, launches new corporate identity

DECEMBER 1, 2006 -- Alcatel (search for Alcatel) and Lucent Technologies (search for Lucent Technologies) today began operations as one corporate entity.

The new company, Alcatel-Lucent, is incorporated in France, with executive offices located in Paris. The company will be traded on Euronext Paris and the New York Stock Exchange beginning today under a new common ticker (Euronext Paris and NYSE: ALU). As a result of the merger, each outstanding share of Lucent common stock has been converted into the right to receive 0.1952 of an Alcatel ADS. In connection with the merger, Alcatel has issued approximately 878 million shares, which is equivalent to the total number of ADS to be issued to the holders of Lucent common stock. Following the completion of the merger, approximately 2.31 billion ordinary shares of Alcatel-Lucent are outstanding.

Alcatel-Lucent says it is well positioned to address the fastest growing areas of network transformation, including IPTV, broadband access, carrier IP, IMS and next-generation networks, and 3G spread spectrum (UMTS and CDMA). With more than 18,000 employees working in services worldwide, the company claims it has the largest and most experienced global services team in the industry. In enterprise communications solutions, Alcatel-Lucent says it is No. 1 in Europe and has more than 250,000 enterprise and government customers worldwide.

"Alcatel-Lucent will be for our customers a partner with the scale and scope to design, build, and manage increasingly complex networks that deliver advanced converged services and communications experience to the end-user," contends Serge Tchuruk, appointed yesterday as Chairman of the Board of the combined company. "That is what Alcatel-Lucent will deliver with an unparalleled focus on execution, innovation and service for our customers: The company will have the most experienced global services team in the
telecommunications industry, as well as one of the largest research, technology, and innovation organizations in the industry," he says. "In fact, our combined company is ideally positioned to help our customers transform their networks so they can offer new kinds of personalized, blended applications and services."

With a presence in 130 countries; 79,000 employees (after completion of the Thales transaction); and balanced revenues across all regions, Alcatel-Lucent has strong customer relationships with the 100 largest telecommunications operators in the world, report company representatives. The company will have four geographic regions-- Asia-Pacific, Europe and North, Europe and South and North America--to answer the needs of service providers, enterprises, and end users in the most advanced telecommunication markets, as well as in high-growth economies.

There will be five Business Groups: The Wireline Business Group, the Wireless Business Group, and the Convergence Business Group to address the needs of the carrier market, as well as the Enterprise Business Group, and the Service Business Group. Each Business Group will have a decentralized regional organization that will provide strong local support to customers.

In addition, there will be several corporate functions that support the company, including worldwide integrated supply chain and procurement, finance, information technology, marketing, human resources, legal, and communications.

Approximately 23,000 of the 79,000 total number of employees at Alcatel-Lucent are in R&D, including global Bell Labs, which will remain headquartered in New Jersey. Together, Alcatel and Lucent invested Euro 2.7 billion in R&D and had 25,000 active patents in calendar year 2005. Alcatel-Lucent says it also leads standards
nitiatives with some 600 experts participating in 130 standardization bodies.

Significant cost synergies are expected to be achieved within three years of closing and will come from several areas, including consolidating support functions, optimizing the supply chain and procurement structure, leveraging R&D and services across a larger base, and reducing the combined worldwide workforce by approximately 9,000 employees, say company representatives. The merger is expected to result in approximately Euro 1.4 billion in pre-tax annual cost synergies. A substantial majority of the restructuring activity is expected to be completed within 24 months after closing. The transaction is expected to be accretive to earnings per share in the first year post closing with synergies, excluding restructuring charges and amortization of intangible assets.

"Through this merger, we are bringing together two top-ranking companies to form an undisputed leader in the industry, a company poised to enrich people's lives by transforming the way the world communicates," contends Patricia Russo, yesterday appointed CEO of the new company. "Alcatel-Lucent is a strong and enduring ally that service providers, governments and enterprises can count on to help them unlock new market and revenue opportunities. This combination represents a strategic fit of vision, geography, solutions, and people, leveraging the best of both companies to deliver meaningful communications solutions that are personalized, simple to adopt, and available globally," she says. "Both Alcatel and Lucent embraced a common culture of innovation and excellence that will help ensure the success of our merger."

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