Details of Alcatel’s purchase of its smaller US rival Lucent Technologies have been revealed at a Paris news conference. It included confirmation that nearly 9,000 people are to lose their jobs.
Alcatel’s chief executive, Serge Tchuruk, who will become the company’s chairman, told reporters: “This is an historic moment for our two companies but also – I think -for the telecommunications industry, because we’ve put together the world’s number one creator of communication solutions.”
By buying Lucent, Alcatel becomes the biggest telecoms equipment maker in the world. It will overtake Cisco in terms of revenue. Last year the two merging companies combined had sales worth 21 billion euros. It has not yet been revealed what the new company will be called. It will be headquartered in Paris and the new chief executive will be the current head of Lucent, Patricia Russo.
The company plans major jobs cuts, around 10% of the 88,000 workforce. That is a sensitive subject in France where unemployment is twice as high as it is the US and Russo said: “We recognised the sensitivity that this creates to the employees of both companies and we will be very fair, and balanced and caring in how we approach this.”
Russo said she aims to save 1.4 billion euros after three years through synergies and Alcatel’s head Serge Tchuruk said the saving could exceed that.
The merged firms believe they will be in a better position to negotiate prices with customers, as well as having stronger research and development capacity.