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Lucent Tries Placating US Concerns Over Alcatel
David Utter
Staff Writer
2006-04-03
 Insider Reports RSS Feed
By creating a separate unit based in the United States to specifically handle US government contracts for networking equipment, Alcatel and Lucent hope to avoid the scrutiny that Lenovo and Check Point have received from politicians.
That scrutiny scuttled the Israel-based Check Point acquisition of Sourcefire and raised a cloud over the State Department's purchase of 15,000 PCs from the Chinese firm Lenovo, which now owns IBM's PC business.
Lucent's CEO Patricia Russo, soon to be CEO of the merged Alcatel and Lucent business, discussed the prospect of interference from the Committee on Foreign Investment in the United States (CFIUS) during the conference call to investors about the merger.
She acknowledged the need to make CFIUS happy with the $13.4 billion deal by creating a subsidiary company based in the United States to handle federal contracts. "This subsidiary would be separately managed by a board composed of three U.S. citizens acceptable to the U.S. government," Russo said.
Lucent currently works on several government projects, including DARPA. Reuters reported how the government may have problems with the merger, as Lucent owns the famed Bell Labs:
For CFIUS, the key question will be "whether the U.S. government is comfortable having Alcatel own a majority stake of a company with these types of sensitive contracts, even under a proxy arrangement," said Jeffrey Bialos, a lawyer who presided over industrial affairs at the Pentagon during the Clinton administration.
One complication could also be the fact that Caisse des Depots et Consignations, a French state-owned financial institution, holds about 4.12 percent of Alcatel and 4.22 percent in voting rights, according to a securities filing.
CFIUS could impose any of several requirements as conditions to approving a deal. Responses from politicians have not been reported yet; many very publicly criticized the Bush Administration over the now-dead Dubai World Ports deal that would have had it manage six US ports.
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Tags: Lucent, Alcatel
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About the Author:
David Utter is a business and technology writer for SecurityProNews and WebProNews.
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