UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
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|_| Preliminary Proxy Statement
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BY RULE 14A-6(E)(2))
|_| Definitive Proxy Statement
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|X| Soliciting Material Pursuant to ss.240.14a-12
LUCENT TECHNOLOGIES INC.
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(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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1) Title of each class of securities to which
transaction applies:
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transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
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The following material was used by executives of Lucent Technologies Inc.
("Lucent") in connection with the filing by Alcatel of the
Registration Statement on Form F-4 relating to the proposed merger between
Lucent and Alcatel:
TABLE OF CONTENTS
F-4 Filing
Conditions to Completion
Severance
Lucent's Special Meeting for Shareholders
Combined Financial Information
Alcatel ADS / Ordinary Shares / Share Trading
PLEASE NOTE THAT ADDITIONAL QUESTIONS AND ANSWERS CAN BE FOUND IN THE F-4 FILING
ON PAGES Q1 - Q5.
F-4 FILING
1. WHY DID ALCATEL FILE AN F-4?
To complete the pending merger between Alcatel and Lucent, Alcatel is required
to file a Form F-4 with the SEC. This form includes a preliminary prospectus of
Alcatel under the Securities Act, regarding the Alcatel ordinary shares
underlying the Alcatel ADSs to be issued to Lucent stockholders as required by
the merger agreement.
In addition, the form also includes a preliminary notice of meeting and a proxy
statement regarding the special meeting of Lucent stockholders at which the
Lucent stockholders will be asked to consider and vote upon a proposal to
approve and adopt the merger agreement and the transactions contemplated by the
merger agreement.
2. WHAT IS CONTAINED IN THE FORM F-4?
The Form F-4 includes a preliminary proxy statement / prospectus that contains
important information about the pending merger transaction between Alcatel and
Lucent, the merger agreement and the Lucent special meeting of stockholders and
other required information.
CONDITIONS TO COMPLETION
3. WHAT ARE THE CONDITIONS TO THE COMPLETION OF THE MERGER?
o Lucent Shareholder approval and adoption of the merger agreement -
affirmative vote by holders of a majority Lucent's outstanding common stock
o Alcatel Shareholder approval of:
>> the issuance of Alcatel ADS and Alcatel ordinary shares in connection
with the merger
>> the issuance of Alcatel ADSs and Alcatel ordinary shares for delivery
upon exercise or conversion of LU stock options, warrants, convertible
debt and equity-based awards granted under any LU employee incentive or
benefit plan
>> the adoption of certain amendments to Alcatel's articles of
association and bylaws
>> the designees to Alcatel's BOD
o Expiration of termination of the waiting period under the Hart-Scott
Rodino Act (HSR)
o Approval under the EU merger regulation
o Committee on Foreign Investment in the United States (CFIUS) approval
o Receipt of approval for listing the Alcatel ADSs on the NYSE, and receipt
of the approval of the AMF and the Euronext Paris SA of the listing of the
Alcatel ordinary shares to be issued as of the effective time of the merger
o The fair market value of the assets of Lucent's major pension plan will
not be less than specified threshold amounts.
o Other customary conditions are detailed in the Form F-4
4. WHAT ARE THE THRESHOLD AMOUNTS OF THE FAIR MARKET VALUE OF LUCENT'S MAJOR
PENSIONS?
The fair market value of the assets of Lucent's major pension plans as of the
last day of the month last ending prior to the closing date of the merger shall
not be less than $28.6 billion if the relevant measurement date is September 30,
2006, decreasing by $200 million as of the first day of each calendar month
thereafter through December 2006, but in no event shall the threshold be less
than $28 billion. As of September 30, 2005, the fair value of plan assets of
Lucent's major pension plans was approximately $34 billion.
5. WHAT DOES CFIUS APPROVAL PROCESS ENTAIL?
Alcatel and Lucent will submit a voluntary notice of the merger to CFIUS in the
near future. CFIUS has 30 calendar days from the date of submission to decide
whether to initiate a formal investigation. If CFIUS declines to investigate, it
sends a "no action" letter, and the review process is complete. If CFIUS decides
to investigate, it has 45 calendar days in which to prepare a recommendation to
the President of the United States, who must then decide within 15 calendar days
whether to block the transaction.
Under the Exon-Florio Act, the President of the U.S. is empowered to prohibit or
suspend an acquisition of, or investment in, a U.S. company by a "foreign
person" if the President, after investigation, finds credible evidence that the
foreign person might take action that threatens to impair the national security
of the U.S. and that other provisions of existing law do not provide adequate
and appropriate authority to protect the national security.
Alcatel and Lucent do not believe a recommendation to block the merger by CFIUS
is warranted under the standards of the Exon-Florio Act.
6. WHAT IS THE STATUS OF THE REVIEW?
Alcatel and Lucent will submit a voluntary notice of the merger to CFIUS in the
near future. I cannot comment beyond the details in the Form F-4.
7. WHAT DOES THE U.S. ANTITRUST APPROVAL PROCESS ENTAIL?
The merger is subject to review by the Antitrust Division and the FTC under the
HSR Act. Lucent and Alcatel have filed the requisite Pre-Merger Notification and
Report Forms under the HSR Act with the antitrust Division and the FTC, after
which Lucent and Alcatel expect that the Antitrust Division will receive
clearance to review the merger under the HSR Act. Absent a request from the
antitrust Division or the FTC for additional information, the waiting period
will expire on June 7th. If a request for additional information is issued, the
waiting period will expire on the thirtieth day after Alcatel and Lucent have
substantially complied with the request.
8. WHAT IS THE STATUS OF THE REVIEW?
Lucent filed the pre-Merger Notification and report Forms under the HSR Act on
May 5, 2006, and Alcatel filed on May 8, 2006.
9. WHAT DOES THE EUROPEAN UNION ANTITRUST APPROVAL PROCESS ENTAIL?
EC Merger Regulation requires notification to and prior approval by the European
Commission of mergers or acquisitions involving parties with aggregate worldwide
sales and individual European Union sales exceeding specified thresholds. Lucent
and Alcatel exceed those thresholds and are working to submit the requisite
notification in the near future.
Once complete notification is filed, the European Commission has an initial
(Phase I) period of 25 working days from the day following the date of
notification, which period may be extended under certain circumstances, in which
to consider whether the merger would significantly impede effective competition
in the common market or a substantial part of it, in particular as a result of
the creating or strengthening of a dominant position.
By the end of this Phase I period, the European Commission must issue a decision
either clearing the merger or opening an in-depth Phase II. A Phase II
investigation can extend the investigation period up to an additional 90-105
working days (125 working days if the parties request extensions).
10. WHAT IS THE STATUS OF THE REVIEW?
Lucent and Alcatel are working to submit the requisite notification in the near
future.
SEVERANCE
11. WHY ARE THE LUCENT'S EXECUTIVE OFFICERS ENTITLED TO CASH SEVERANCE PAYMENTS?
The Lucent officer Severance Policy provides protection in the event of
termination by Lucent without cause, or following a change of control of Lucent.
The merger will constitute a change of control of Lucent under the officer
Severance Program.
Lucent's executive officers who were officers of Lucent prior to 10/2003 are
provided with severance protection under Lucent's Officer Severance Policy in
the event of a termination of employment by Lucent without cause (as defined in
the policy) or, following a change of control of Lucent. Upon such a qualifying
termination, the policy provides the terminated officer with two years of salary
continuation and with a bonus payment at target levels during each of the two
Decembers during the continuation period. The following Lucent executive
officers are covered by the Officer Severance Policy: Ms. Russo; Mr. D'Amelio,
Ms. Davidson; Mr. Brewington; Ms. Christy; Mr. Carapezzi; Mr. Kritzmacher and
Mr. Meyer.
In addition, Lucent executive officers who became officers of Lucent on or after
10/2003, are covered by Lucent's officer Severance program, which following a
change of control, provides benefits upon qualifying terminations, which are
substantially similar to those provided by the officer Severance Policy, but
with a continuation period of one year rather than two years (including for
purposes of base salary and payment of target bonus). The following Lucent
executive officers are covered by the Officer Severance Program: Mr. Hitchcock,
Mr. Jones and Mr. Kim.
LUCENT SPECIAL MEETING OF STOCKHOLDERS
12. WHEN AND WHERE IS THE SPECIAL MEETING OF LUCENT STOCKHOLDERS TO VOTE ON THE
MERGER?
The meeting is scheduled for September 7, 2006. The location has not yet
been announced.
13. ARE LUCENT STOCKHOLDERS ENTITLED TO DISSENTERS' RIGHTS OR APPRAISAL RIGHTS?
No, they are not provided under Delaware law for the merger.
14. WHAT ARE DISSENTERS' RIGHTS OR APPRAISAL RIGHTS?
These rights entitle dissenting stockholders to have their shares purchased at
their appraised fair value following a process specified by Delaware law.
15. HOW CAN LUCENT STOCKHOLDERS WHO ARE NOT ABLE TO ATTEND THE SPECIAL MEETING
VOTE THEIR SHARES?
Lucent stockholders may submit their votes by proxy via the Internet, the
telephone or mail. Proxies have not yet been issued.
PRO FORMA COMBINED FINANCIAL INFORMATION
16. ARE THESE THE FINANCIAL RESULTS WE SHOULD EXPECT FROM THE COMBINED COMPANY?
The selected unaudited pro forma condensed combined financial information is
presented for illustrative purposes only and is not necessarily indicative of
operating results or financial condition of the combined company that would have
been achieved had the merger been completed during the periods presented, nor is
it indicative of the future operating results or financial position of the
combined company.
It also does not reflect any cost savings or other synergies that may result
from the merger, nor does it reflect any special items, such as payments
pursuant to change of control provisions or restructuring and integration costs
that may be incurred as a result of the merger.
The selected unaudited pro forma condensed combined financial information
records any differences between the fair value of the Alcatel ADSs issued and
the fair value of the Lucent assets and liabilities as goodwill.
The selected unaudited pro forma condensed combined financial information
reflects the estimated effect of the proposed Thales transaction.
ACCOUNTING METHOD
17. UNDER WHICH ACCOUNTING METHOD WILL ALCATEL ACCOUNT FOR THE MERGER?
Alcatel intends to account for the merger as a business combination applying the
purchase method of accounting as defined by IFRS 3 - Business combinations, as
well as SFAS 141 - Business combinations under US GAAP.
18. WHAT DOES THE PURCHASE ACCOUNTING METHOD ENTAIL?
In accordance with this method, the acquirer purchases net assets and recognizes
at fair value the assets acquired and liabilities and contingent liabilities
assumed, including those not previously recognized by the acquired entity. The
excess of the purchase price over the fair value of identifiable net assets is
recognized as goodwill.
19. IF THIS TRANSACTION IS A MERGER OF EQUALS, WHY IS ALCATEL IDENTIFIED AS THE
ACQUIRER UNDER THE PURCHASE ACCOUNTING METHOD?
Because the purchase method views a business combination from the acquirer's
perspective, it assumes that one of the parties to the transaction can be
identified as the acquirer. Therefore, one of the two parties must be deemed to
be the acquiror solely for purposes of applying the appropriate accounting.
Based on the analysis of all factors set forth in IFRS and GAAP, it has been
concluded that using the purchase method in accordance with these accounting
standards, the merger will be treated as an acquisition of Lucent by Alcatel.
That said, it's important to remember that there are other factors that make
this a merger of equals besides accounting methods for a merger.
o The new combined company will be incorporated in France, with executive
offices in Paris. The North American operations will be based in New
Jersey, U.S.A., where global Bell Labs will remain headquartered
o Two highly regarded business leaders who share common values vision, and
business philosophy will lead this new company. Serge Tchuruk will be the
non-executive Chairman, and Patricia Russo will be the CEO. In addition, an
experienced international management team will be combining equally the
best of both companies.
>> The board of directors will have equal representation from each
company, including Serge Tchuruk and Patricia Russo, five of Alcatel's
current directors and five of Lucent's current directors. The board
will also include two new independent European directors to be mutually
agreed upon.
>> For a three-year period following the completion of the merger; at
least 66 2/3% vote of the entire vote of directors of the combined
company would be required to remove the chairman of the board or the
chief executive officer of the combined company and to decide on any
replacement.
ALCATEL ADS / ORDINARY SHARES / SHARE TRADING
20. WHAT IS AN ADS?
An ADS is an American Depositary Share, which is a security that allows
stockholders in the U.S. to more easily hold and trade interests in
foreign-based companies. ADS's are often evidenced by certificates known as
American Depositary receipts, or ADRs.
Each Alcatel ADS represents one Alcatel ordinary share. Alcatel ADSs are
publicly traded in the U.S. and are currently listed on the NYSE under the
trading symbol ALA.
21. WHAT IS AN ALCATEL ORDINARY SHARE?
Alcatel ordinary shares are quoted in euros on the Euronext Paris SA, which is
the French national stock exchange. Alcatel ADSs are similar to the underlying
Alcatel ordinary shares and carry substantially the same rights, however they
are not identical.
22. WHAT ARE THE MAJOR DIFFERENCES IN THE SHAREHOLDER RIGHTS?
Please note that upon completion of the merger, the rights of Lucent
stockholders who become holders of Alcatel ADSs will be governed by the French
Commercial Code, Alcatel's articles of association and bylaws including the
proposed amendments, as approved by the Alcatel shareholders.
Among other things:
o One voting right is attached to each Alcatel ordinary share (including
Alcatel ordinary shares underlying Alcatel ADSs) at all shareholders'
meetings. However, double voting rights are attached to all fully paid up
registered ordinary shares (including Alcatel ordinary shares underlying
Alcatel ADSs) that are registered in the name of the same holder for at
least three years. Double voting rights are cancelled for any share that is
converted into a bearer share or whose ownership is transferred.
o Under Alcatel's ADS deposit agreement, because ADS holders are entitled to
exercise voting rights pertaining to the ordinary shares represented by
their ADSs, they are also entitled to double voting rights if the Alcatel
ordinary shares represented by their ADSs are held in registered form for
at least three years. In general the Alcatel ordinary shares represented by
the Alcatel ADSs are held in bearer form unless the holder of the ADS
notifies the depositary in writing that the ordinary shares should be held
in registered form.
Monetary instruments are in bearer form when they are blank (when the
owner's name does not appear on the instruments) or when they are "payable
to the bearer." This means that anybody can bring the monetary instruments
to a financial institution to cash them.
More information about differences in stockholders' rights can be found on
pages 137 - 155 in the F-4.
23. WHAT IS A FOREIGN PRIVATE ISSUER?
The term foreign private issuer means any foreign issuer other than a foreign
government, EXCEPT an issuer meeting the following conditions:
o More than 50 percent of the issuer's outstanding voting securities are
directly or indirectly held of record by residents of the United States;
and
o Any of the following:
>> The majority of the executive officers or directors are United States
citizens or residents;
>> More than 50 percent of the assets of the issuer are located in the
United States; or
>> The business of the issuer is administered principally in the United
States.
24. WHAT ARE IMPLICATIONS OF A FOREIGN PRIVATE ISSUER?
As a foreign private issuer, in the U.S., Alcatel is required to file with the
SEC and Annual Report on form 20-F within six months after the end of each
fiscal year.
Furthermore, Alcatel must furnish reports on Form 6-K with respect
to any material information, which must be publicly disclosed in France or file
with Euronext Paris SA, or regarding information distributed or required to be
distributed by Alcatel to its shareholders.
In addition, as a foreign private issuer, Alcatel is exempt from certain rules
under the Exchange Act, including proxy rules, which impose certain disclosure
and procedural requirements for proxy solicitations under Section 14 of the
Exchange Act.
Moreover, Alcatel is not required to comply with Regulation FD, and Alcatel
officers, directors and principal shareholders are exempt from the reporting and
"short-swing" profit recovery provisions of Section of the Exchange Act and the
rules under the Securities Exchange Act with respect to their purchases and
sales of Alcatel ordinary shares and ADS.
If Alcatel loses its status as a foreign private issuer, it will no longer be
exempt from such rules and, among other things, will be required to file
periodic reports and financial statements as if it were a company incorporated
in the U.S.
SAFE HARBOR FOR FORWARD LOOKING STATEMENTS AND OTHER IMPORTANT INFORMATION
This document contains statements regarding the proposed transaction between
Lucent and Alcatel, the expected timetable for completing the transaction,
future financial and operating results, benefits and synergies of the proposed
transaction and other statements about Lucent and Alcatel's managements' future
expectations, beliefs, goals, plans or prospects that are based on current
expectations, estimates, forecasts and projections about Lucent and Alcatel and
the combined company, as well as Lucent's and Alcatel's and the combined
company's future performance and the industries in which Lucent and Alcatel
operate and the combined company will operate, in addition to managements'
assumptions. These statements constitute forward-looking statements within the
meaning of the U.S. Private Securities Litigation Reform Act of 1995. Words such
as "expects," "anticipates," "targets," "goals," "projects," "intends," "plans,"
"believes," "seeks," "estimates," variations of such words and similar
expressions are intended to identify such forward-looking statements which are
not statements of historical facts. These forward-looking statements are not
guarantees of future performance and involve certain risks, uncertainties and
assumptions that are difficult to assess. Therefore, actual outcomes and results
may differ materially from what is expressed or forecasted in such
forward-looking statements. These risks and uncertainties are based upon a
number of important factors including, among others: the ability to consummate
the proposed transaction; difficulties and delays in obtaining regulatory
approvals for the proposed transaction; difficulties and delays in achieving
synergies and cost savings; potential difficulties in meeting conditions set
forth in the definitive merger agreement entered into by Lucent and Alcatel;
fluctuations in the telecommunications market; the pricing, cost and other risks
inherent in long-term sales agreements; exposure to the credit risk of
customers; reliance on a limited number of contract manufacturers to supply
products we sell; the social, political and economic risks of our respective
global operations; the costs and risks associated with pension and
postretirement benefit obligations; the complexity of products sold; changes to
existing regulations or technical standards; existing and future litigation;
difficulties and costs in protecting intellectual property rights and exposure
to infringement claims by others; and compliance with environmental, health and
safety laws. For a more complete list and description of such risks and
uncertainties, refer to Lucent's annual report on Form 10-K for the year ended
September 30, 2005 and quarterly reports on Form 10-Q for the periods ended
December 31, 2005 and March 31, 2006 and Alcatel's annual report on Form 20-F
for the year ended December 31, 2005 as well as other filings by Lucent and
Alcatel with the U.S. Securities and Exchange Commission (the "SEC"). Except as
required under the U.S. federal securities laws and the rules and regulations of
the SEC, Lucent and Alcatel disclaim any intention or obligation to update any
forward-looking statements after the distribution of this document, whether as a
result of new information, future events, developments, changes in assumptions
or otherwise.
IMPORTANT ADDITIONAL INFORMATION FILED WITH THE SEC
In connection with the proposed transaction between Lucent and Alcatel, Alcatel
has filed a registration statement on Form F-4 (File no. 33-133919) (the "Form
F-4") to register the Alcatel ordinary shares underlying the Alcatel American
Depositary Shares ("ADS") to be issued in the proposed transaction. Alcatel and
Lucent have also filed, and intend to continue to file, additional relevant
materials with the SEC, including a registration statement on Form F-6 (the
"Form F-6" and together with the Form F-4, the "Registration Statements") to
register the Alcatel ADSs to be issued in the proposed transaction. The
Registration Statements and the related proxy statement/prospectus contain and
will contain important information about Lucent, Alcatel, the proposed
transaction and related matters. Investors and security holders are urged to
read the Registration Statements and the related proxy statement/prospectus
carefully, and any other relevant documents filed with the SEC, including all
amendments, because they contain important information. Investors and security
holders may obtain free copies of the documents filed with the SEC by Lucent and
Alcatel (including the Form F-4 and, when filed, the Form F-6) through the web
site maintained by the SEC at www.sec.gov. In addition, investors and security
holders may obtain free copies of materials filed with the SEC by Lucent and
Alcatel (including the Form F-4 and, when filed, the Form F-6) by contacting
Investor Relations at www.lucent.com, by mail to 600 Mountain Avenue, Murray
Hill, New Jersey 07974 or by telephone at 908-582-8500 and from Alcatel by
contacting Investor Relations at www.alcatel.com, by mail to 54, rue La Boetie,
75008 Paris, France or by telephone at 33-1-40-76-10-10.
Lucent and its directors and executive officers also may be deemed to
be participants in the solicitation of proxies from the stockholders of Lucent
in connection with the transaction described herein. Information regarding the
special interests of these directors and executive officers in the transaction
described herein is included in the Form F-4 (and will be included in the
definitive proxy statement/prospectus for the proposed transaction). Additional
information regarding these directors and executive officers is also included in
Lucent's proxy statement for its 2006 annual meeting of stockholders, which was
filed with the SEC on or about January 3, 2006. This document is available free
of charge at the SEC's web site at www.sec.gov and from Lucent by contacting
Investor Relations at www.lucent.com, by mail to 600 Mountain Avenue, Murray
Hill, New Jersey 07974 or by telephone at 908-582-8500.
Alcatel and its directors and executive officers may be deemed to be
participants in the solicitation of proxies from the stockholders of Lucent in
connection with the transaction described herein. Information regarding the
special interests of these directors and executive officers in the transaction
described herein is included in the Form F-4 (and will be included in the
definitive proxy statement/prospectus for the proposed transaction). Additional
information regarding these directors and executive officers is also included in
Alcatel's annual report on Form 20-F filed with the SEC on March 31, 2006. This
document is available free of charge at the SEC's web site at www.sec.gov and
from Alcatel by contacting Investor Relations at www.alcatel.com, by mail to 54,
rue La Boetie, 75008 Paris, France or by telephone at 33-1-40-76-10-10.