ALCATEL said to be in talks to buy Lucent for $40 billion

<br>NEW YORK (AP) _ French telecommunications equipment maker Alcatel SA is reportedly in advanced talks to buy U.S. rival Lucent Technologies for slightly more than $40 billion. <br><br>The New York Times

Friday, May 18th 2001, 12:00 am

By: News On 6

NEW YORK (AP) _ French telecommunications equipment maker Alcatel SA is reportedly in advanced talks to buy U.S. rival Lucent Technologies for slightly more than $40 billion.

The New York Times reported Friday that the deal would be a nearly all-stock transaction representing about a 20 percent premium over Lucent's current value of $33.5 billion. Alcatel is valued at $39.5 billion.

The talks have reached a critical stage and a decision about whether to proceed with formal negotiations is expected within the next week, the Times reported, citing sources close to the deal.

If the companies decide to move forward, a deal could be announced by early June, the sources said. The chances of the deal going through were described as 50-50.

Lucent, spun off from AT&T Corp. in 1996, is among the most widely held stocks in the country, but it has fallen on hard times in the last year. A string of strategic missteps and profit disappointments led to the ouster of Lucent's chief executive and a major restructuring.

In the most recent quarter, the New Jersey-based company lost $3.69 billion.

Discussions about a sale of Lucent to Alcatel grew out of talks about the sale of Lucent's fiber optic cable business. Alcatel still plans to bid for that business if it does not acquire all of Lucent, the sources said.