(Associated Press via NewsEdge) Despite a rocky couple of months for both Alcatel and Lucent Technologies, shareholders on both sides should approve their upcoming merger, according to two proxy advisory firms.
Alcatel and Lucent shareholders will meet September 7 to vote on the merger of the two telecommunication equipment makers.
The deal has faced critics from both sides, with particular noise coming from the Alcatel camp, as Lucent's profit warning and disappointing quarterly results highlighted its recent struggles.
But Institutional Shareholder Services and Glass, Lewis & Co. said the two companies are better off together than apart.
'Ultimately, we believe that the proposed combination is somewhat of a bitter pill for shareholders,' said the Glass Lewis report. 'Despite these troubles, it is difficult to argue against the strategic rationale of the proposed combination.'
If the companies are able to turn out the merger-cost savings they are targeting, the combined entity will be in a stronger competitive position compared with its peers, although ISS noted that executing on the combination will be the company's biggest risk.
Lucent and Alcatel, locked in a stock-swap agreement, have seen their shares sink since the deal was announced.
From the April 3 opening price following the announcement, Alcatel has fallen around 27% to its recent price, while Lucent has fallen around 21%.
The two are among several companies in the industry seeking partners: Nokia and Siemens are combining their telecom equipment businesses into a joint venture; Ericsson acquired Marconi's telecom-equipment assets; and Motorola formed a partnership with Chinese equipment maker Huawei Technologies.
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