Alcatel SA and Lucent Technologies overcame shareholder misgivings to win firm backing Thursday for their 8.4 billion euros ($10.7 billion) merger.
Votes in Paris and Wilmington, Delaware, gave the go-ahead for Alcatel's all-stock acquisition of New Jersey-based Lucent, scheduled for completion by the end of the year.
Many Alcatel shareholders had complained that they were paying too much for Lucent in the light of weaker earnings and guidance posted by the U.S. company since the combination was negotiated.
Lucent, which had faced vocal but less widespread opposition from some of its own investors, last week settled two shareholder lawsuits that had threatened to delay the merger vote.
Analysts had nevertheless predicted that Alcatel shareholders would offer their support, concluding that even a badly priced deal was better than none.
Recent sector consolidation has increased doubts about whether either company has the critical mass to go it alone. Nokia Corp. and Siemens AG announced a telecom equipment joint venture in June, eight months after LM Ericsson bought Marconi.
Lucent Chairman and Chief Executive Patricia Russo, who will lead the new Alcatel-Lucent from its Paris headquarters, told shareholders the deal would create the first truly global company in the sector.
'On our first day in operation, we'll be the No. 1 company in wireline, we'll be No. 3 in wireless and in the top three in services,' Russo said.
Alcatel-Lucent will have the industry's broadest product portfolio and one of the largest research and development operations, she said.
Russo and Alcatel boss Serge Tchuruk already named non-executive chairman of the combined company both faced down hecklers as they took the agreement to a vote.
'Mark my words, within one year you will want to leave,' shareholder activist Evelyn Davis admonished Russo. 'The French are going to run the show.'
When it came to the count, however, the deal passed with 94 percent of ballots cast by Lucent shareholders, although a low turnout meant that it only just scraped the required majority of all outstanding shares. Among Alcatel shareholders, the acquisition proposal won more than 85 percent of votes cast.
The combined company will have a strong, evenly distributed presence around the globe with Europe, North America and Asia each supplying close to one-third of its 19.5 billion euros ($25 billion) annual sales. North America currently accounts for 14 percent of Alcatel's business, while Europe generates 13 percent of Lucent's.
Alcatel is also buying Nortel Networks Corp.'s wireless business for $320 million adding a portfolio of UMTS mobile phone technology to its own strength in GSM networks and Lucent's expertise in CDMA, the third main wireless standard.