Nov. 21, 2006

President Bush approved a recommendation by a Treasury Department-led interagency group supporting the merger of giant French telecom vendor Alcatel SA and Lucent Technologies Inc.

The president's OK clears the way for the $14 billion deal to close some time next week.

White House approval was the last hurdle to the companies’ merger process. The Committee on Foreign Investment in the United States conducted a two-stage, 75-day security review on the Alcatel-Lucent transaction.

“With support from the intelligence community, CFIUS's detailed analysis took into account all relevant national security factors.

These included but were not limited to the scope of Lucent's operations and its work with state, local and federal government agencies, the globalizing nature of the telecommunications industry and the important research and development being conducted at Lucent's Bell Laboratories.

They also included those factors enumerated in the Exon-Florio legislation,” the White House stated.

“Based on these and other considerations, and as a strict condition for the merger to proceed, Alcatel and Lucent have agreed with U.S. government agencies to enter into two robust and far-reaching agreements designed to ensure the protection of our national security.”

The White House said Bush’s ruling “demonstrates the commitment of the United States to protect its national security interests and maintain its openness to investment, including investment from overseas, which is vital to continued economic growth, job creation, and an ever-stronger nation.”

Alcatel and Lucent said they expect to complete the merger Nov. 30.

White House action on the Alcatel-Lucent merger comes one week after House Armed Services Committee Chairman Duncan Hunter (R-Calif.) held a closed-door hearing on the deal.

Hunter, who recently announced 2008 presidential aspirations, stated Nov. 14 that “the process to evaluate the national security implications of the merger between Alcatel and Lucent is incomplete at this point.” Hunter last week said he wanted to gather additional information on the merger.

Hunter originally scheduled an open hearing to hear testimony from Lucent Chief Executive Officer Patricia Russo, Alcatel Chief Operating Officer Mike Quigley, Deputy Secretary of Defense Gordon England, and Clay Lowery, assistant secretary of Treasury for international affairs.

The hearing was abruptly changed to a closed briefing.

The turnabout prompted speculation Hunter might have been pressured by the White House to tone down his oversight of the Alcatel-Lucent merger.

Josh Holly, a spokesman for the Armed Services Committee, disputed that notion. Holly said Hunter had been moving toward a closed briefing on his own.

Holly told RCR Wireless News the night before the closed-door hearing that Hunter met with DoD officials and the following day with other administration officials.

Source: RCR News