Shareholders of Alcatel and Lucent have approved the companies' merger plans, 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 yesterday in Delaware. It required 50 percent of the vote and received 51.97 percent. 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.
The two networking and telecommunications equipment manufacturers announced their intention to merge in April. The combined entity will have annual revenue of around €21 billion.
Lucent CEO Patricia Russo will head the combined company to be called Alcatel Lucent and based in Paris, while Alcatel CEO Serge Tchuruk will become a non-executive chairman. Alcatel and Lucent expect that the merged entity will make annual cost savings of about €1.4 billion, around half of that from job cuts. They plan to cut 9,000 from a combined staff of 88,000.
The largest remaining obstacle to the merger is convincing the Committee on Foreign Investment in the US that the deal presents no threat to national security. To allay such fears, Lucent will set up a separate subsidiary run by US citizens to handle sensitive research and development work for the US government, while in France, Alcatel agreed to sell its satellite business to French aerospace electronics group Thales 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.