Alcatel Lucent Merger Under Fire
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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