Retirees Seek to Protect Pensions in Alcatel Merger Talks
By Sara Silver
The Wall Street Journal
Friday, March 31, 2006
Retirees of Lucent Technologies Inc. are threatening to ask
the U.S. government to block its potential merger with
Alcatel SA of France unless the combined entity agrees to
protect their pensions and benefits.
The Lucent Retiree Organization is demanding that any merged
entity guarantee that their pensions and benefits "will be
carried forward and their pension plans will always be fully
funded." It is also threatening to ask government
regulators not to approve any merger unless the pension plan
has fiduciaries independent of both companies.
At the heart of the dispute is the company's $34 billion
pension plan, which covers 20,000 U.S. employees and 120,000
U.S. retirees. With $2.7 billion more in assets than
liabilities, the pension plan is an important resource to
Lucent because the assets contribute accounting income that
boosts quarterly profits, and because part of its assets
legally can be used to pay for retiree medical benefits.
"No one should want a foreign company to own a $34 billion
pension fund -- worth more than twice Lucent's market value
-- unless safeguards are in place to protect the pension and
benefits of 235,000 retirees and their dependents," said Ken
Raschke, president of the retiree group. The current value
of Lucent's stock is $13.8 billion.
Lucent declined to comment.
The companies have been holding talks to merge, reportedly
into a French-based company to be headed by Lucent's current
chief executive, Patricia Russo. Alcatel is holding a board
meeting on Saturday to take up the issue.
Alcatel is also trying to conclude longstanding talks aimed
at folding its satellite activities into French defense
electronics company Thales SA prior to a deal with Lucent.
But European Aeronautic Defence and Space Co., the parent of
Airbus, reportedly wants its Astrium satellite unit to be
involved in any consolidation.
French Finance Minister Thierry Breton said Friday the
government would back a satellite deal involving Alcatel,
Thales and EADS. "If the companies consider that it's in
their interests, then of course we're favorable,'' Mr.
Breton said at his quarterly news conference on the economy.
The Lucent Retiree Organization says it represents the
interests of retirees and their dependents of Lucent, its
Bell Labs, plus those who retired from Western Electric and
AT&T Network Systems.
Relations between Lucent and its retirees have grown frosty
in recent months. Shareholders voted in February to approve
a retiree-sponsored measure tying executive stock grants to
company performance. Later, Lucent's general counsel said
the company would no longer have direct contact with the
retiree group because it was supporting "multiple lawsuits
against the company," according to a letter posted on its
--The Associated Press
contributed to this article.
Write to Sara Silver at