The Lucent Technologies Inc. merger with Alcatel SA was approved today by shareholders of both companies. At a special shareholder meeting in Wilmington, Del., 52% of Lucent's outstanding shares were cast in support of the deal. Lucent CEO Patricia Russo announced at the meeting that Alcatel shareholders also approved the $10.8 billion merger at a separate meeting in Paris. The combined company will be called Alcatel Lucent.
While most observers expected the deal to be approved, some European shareholders had raised questions about the price of one Alcatel share for five Lucent shares being paid by Alcatel investors. There also was some controversy among European shareholders about whether Lucent's pension liabilities, if measured in the same way as Alcatel's, would lead to a funding gap of as much as $4 billion. Several representatives of unions that have labor pacts with Lucent expressed concern about the future of their health benefits.
Ms. Russo told shareholders that many concerns of the European investors were put to rest after Lucent executives explained how the pension plan is funded and how it operates. "A lot of the dialogue is education about the pension plans, the liability assumptions, and assuring investors that Lucent's pension fund management has been very prudent (and produced) good returns on our pension plans," she said at the shareholders' meeting.
