(Associated Press via NewsEdge) Alcatel's purchase of US rival Lucent Technologies looks set to clear its highest remaining hurdle when shareholders on both sides of the Atlantic vote on whether to go ahead with the $11-billion deal to create a new global force in telecom equipment.
Both companies are likely to win their shareholders' blessing, analysts predict, with Alcatel investors swallowing their misgivings about the price of the all-stock deal - because the alternatives are worse.
'For Alcatel shareholders, there's more to lose than to gain by refusing the merger,' said Odon de Laporte of CA Cheuvreux.
The brokerage expects Alcatel to muster the required two-thirds majority of votes by a comfortable margin despite terms now seen as 'a little generous to Lucent holders' in light of weaker earnings and guidance posted by the US company since the deal was announced.
Investors broadly appreciate the logic of the deal, which will create a stronger player in the fast-consolidating telecom industry.
With annual sales of about $25 billion and an 18% share of the global market for telecom gear - the backbone of mobile phone, fixed-line and Internet-based services - Alcatel-Lucent will negotiate better prices with suppliers and customers than either company can win alone, the deal's supporters say.
But Paris-based Proxinvest, which advises institutional investors such as pension funds, is sticking to its earlier recommendation that Alcatel shareholders reject the combination unless the stock swap is revalued to offer one Alcatel American Depository Share for every seven Lucent shares, instead of the current five.
Proxinvest CEO Pierre-Henri Leroy said it was unclear how many of the institutions that held 70% of Alcatel stock might oppose the deal. 'In the end they will vote as they see fit,' he said.
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