PARIS -- Alcatel-Lucent (Euronext Paris and NYSE: ALU) and Thales today announced that they have signed a final agreement on the transfer of Alcatel-Lucent’s transportation, security and space assets to Thales and on the future industrial cooperation of the two groups.

This agreement follows the signature of a new Space Alliance agreement between Thales, Alcatel-Lucent and Finmeccanica, in which Finmeccanica agreed to the transfer to Thales of Alcatel-Lucent’s share in Alcatel Alenia Space and Telespazio, the two joint ventures* with Finmeccanica.

On November 28, the European Commission has entered Phase II of the regulatory approval process for the transfer to Thales of Alcatel-Lucent’s share in Alcatel Alenia Space and Telespazio because of competition concerns related to the position of Thales’ Space Traveling Wave Tubes (TWT) business. This phase is foreseen to last for a maximum of 90 working days. On November 7, 2006, the European Commission provided its approval to the transfer of Alcatel-Lucent’s transportation and security assets.

The transaction will be implemented in two phases:

Phase one: Thales will convene an extraordinary general Shareholders’ Meeting on January 5th, in order to approve the transfer of Alcatel-Lucent’s transportation and security assets, subject to the approval by French regulatory bodies.

Phase two: Regarding the competition concerns related to the transfer of the space activities, Thales will provide the Commission with clarifications and remedies in view of reaching a positive conclusion and a closing no later than April 2007.

Once completed, the activities transferred to Thales include a total of approximately 11,000 employees. They generated revenues of approximately € 1.9 billion in 2005.

Alcatel-Lucent (NYSE: ALU)

Thales SA (Paris: TCFP.PA)