1. Explain the logic behind combining the two companies. Be specific.
2. What major challenges were the management of the combined companies likely to face? How would you recommend resolving these issues?
3. Most corporate mergers are beset by differences in corporate cultures. How do cross-border transactions compound these differences?
4. Why do you think mergers, both domestic and cross-border, are often communicated by the acquirer and target firms’ management as mergers of equals?
5. In what way would you characterize this transaction as a merger of equals? In what ways should it not be considered a merger of equals?

Alcatel SA and Lucent Technologies signed a merger pact on April 3, 2006, to form a Paris-based telecommunications equipment giant. The combined firms would be led by Lucent’s chief executive officer Patricia Russo. Her charge would be to meld two cultures during a period of dynamic industry change. Lucent and Alcatel were considered natural merger partners because they had overlapping product lines and different strengths. More than two-thirds of Alcatel’s business came from Europe, Latin America, the Middle East, and Africa. The French firm was particularly strong in equipment that enabled regular telephone lines to carry high-speed Internet and digital television traffic. Nearly two-thirds of Lucent’s business was in the United States. The new company was expected to eliminate 10% of its workforce of 88,000 and save $1.7 billion annually within three years by eliminating overlapping functions.