As Alcatel (NYSE: ALA; Paris: CGEP:PA) and Lucent Technologies Inc. (NYSE: LU) prepare to merger, any hopes of a quiet wedding ceremony have been dashed by opposition from both sides of the Atlantic. (See Alcatel, Lucent Seal Deal.)

The two firms have moved fast since they formally announced their engagement in early April this year, appointing (and re-appointing) senior management, getting the green light from regulators, and deciding on a name for the combined company. (See Alcatel/Lucent Decide on New Name, Lucatel Names More Execs, Lucatel Clears Euro Hurdle, Quigley Steps Down as Lucatel COO, Inside Lucatel: Quigley's Not Mad at Pat, and Lucatel: New Team, Old Faces.)

Now just three hurdles remain. Next Thursday, September 7, sees the shareholders' meetings. Alcatel's is due to take place at the Palais Omnisports of Paris-Bercy at 2 p.m. Paris time (8 a.m. Eastern time); Lucent's at the DuPont Theatre in Wilmington, Del., at 11 a.m. Eastern. Then, some time in the next three months, the companies hope to get approval for their merger from the Committee on Foreign Investment in the United States (CFIUS) -- more on that later.

But with only days to go before shareholders have their say, opposition to the deal has emerged on both sides of the water, adding to the pressure already caused by the significant dip in the valuations of the two vendors since the merger proposal was announced.

Alcatel's share price today is $12.76, down more than 17 percent from the $15.40 price the stock commanded on April 2 when the deal was struck. Lucent's stock is also down over the same period: It's at $2.37 today, down about 23 percent from the $3.05 price on April 2.

Trouble down New Jersey way
In the U.S., the Superior Court of New Jersey, Law Division, Union County, will decide next Wednesday, September 6, whether it will grant an injunction to postpone the vendor's shareholder meeting

According to a Securities and Exchange Commission (SEC) filing made by Lucent, that court hearing is the latest move by plaintiffs in a class action known as "Resnick v. Lucent Technologies Inc. et al" that was originally filed on April 3. That class action represents Lucent shareholders who believe the proposed merger fails to "to maximize shareowner value in the transaction."

Lucent, though, reckons the meeting and merger will proceed as planned. "We believe the action is without merit, and we do not believe that the standards for granting an injunction will be met," says a Lucent spokesman. "Therefore, we do not expect this action to delay the shareholder vote related to our proposed merger with Alcatel or the timing of the completion of the merger. We intend to vigorously defend against such claims." The vendors remain "on track" to complete the merger before the year's end, he adds.

Should the meeting take place, the merger resolution requires a simple majority to be passed.

Lucent faces another class action suit, filed on May 4 in in the U.S. District Court of the Southern District of New York, known as "AR Maley Trust v. Lucent Technologies, et al," which also claims that the merger terms fail to maximize shareholder value, and alleges that Lucent and its directors "breached their fiduciary duties" as a result. Naturally, Lucent stated in an SEC filing that it "believes the action is without merit and that Lucent has substantial defenses to the claims."

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Ennui à Paris
While some Lucent shareholders believe they're getting a raw deal, the view of one influential outfit in Paris is that it's Alcatel's shareholders that are being sold short.

French investment advisor Proxinvest has sent notes to its clients urging them to vote against the merger at next Thursday's meeting.

In a statement posted on its Website, the firm states that "while the strategic features of the deal make sense, the financial conditions of the exchange appear quite unfavorable to Alcatel shareholders, while the proposed corporate conditions are very disappointing."

Proxinvest believes the merger stock swap should be about seven Lucent shares for each Alcatel share instead of the five agreed upon in the merger terms.

The firm's advisors believe the terms of the merger do not "credit Alcatel's better earnings and much lighter future pension charges," and criticize the management techniques, decisions, and remuneration of Alcatel's current CEO Serge Tchuruk, who is in line to be the merged company's non-executive chairman, and Lucent's CEO Pat Russo, who will hold the same post at Alcatel Lucent.

A better prospect, Proxinvest believes, would be for Alcatel to remain on its own and "consolidate its recovery under the designated successor of Tchuruk, the Australian Mike Quigley, the COO, as new CEO." (See Alcatel Gets Quigley With It and Quigley Steps Down as Lucatel COO.)

Proxinvest's clout with investors means it could have an impact on next week's vote, especially as, to be passed, the merger resolution requires more than two thirds of votes cast at the meeting, a higher ratio than at Lucent.

Alcatel believes it will get the necessary support, though. A spokesman for the French giant says that "management continues to get support from shareholders" and "we remain confident the deal will close by the end of the calendar year."

The vendor also counters Proxinvest's claim that the deal isn't good value for Alcatel shareholders. The deal will "create value for the shareholders," says the spokesman, adding that "the transaction is accretive to Alcatel's shareholders."

There are no plans to counter Proxinvest's note before next week's meeting, though. Any issues raised "will most probably be addressed during the shareholders' meeting," says Alcatel.

But what if the deal isn't cleared? Will the terms of the merger be altered? The spokesman says only that the merger agreement signed on April 2 doesn't include the ability to change the share swap ratios.

Presidential approval
Should Alcatel and Lucent receive the approval of their shareholders, then the merger's closure will rest on a green light from the CFIUS, which, under certain circumstances, requires the thumbs up from the U.S. President.

CFIUS approval can take up to 90 days from the date of a formal submission, if the committee decides in the first 30 days of consideration that a formal investigation is required. If that is the case, the CFIUS has 45 days to prepare a recommendation to the President, who has 15 days to decide whether to block the transaction.

But if the CFIUS decides no investigation is needed, it simply sends a "no action" letter to the relevant parties and the process is complete. In the case of Alcatel and Lucent, that could happen in mid-September.

The vendors aren't saying when that submission was made, but filings made by Lucent with the SEC show it was made between August 8, when the company stated that "Alcatel and Lucent plan to submit a notice of the merger to CFIUS," and August 23, when the companies confirmed in another SEC filing that a formal notice had been submitted.

The main concern of CFIUS would be national security, but the vendors hope to have addressed any such concerns by forming a separate subsidiary, managed by a board comprising three U.S. citizens, to deal with Lucent's U.S. government agency business. (See Lucent Creates Subsidiary.)

And the names proposed for that board should appease even the most paranoid CFIUS members. In a recent SEC filing, Lucent noted that the three individuals to be proposed are: William J. Perry, former U.S. Secretary of Defense; R. James Woolsey, former director of the CIA and former Under Secretary of the U.S. Navy; and Lt. Gen. Kenneth A. Minihan, U.S. Air Force (Ret.), former director of the National Security Agency.

— Ray Le Maistre, International News Editor, Light Reading