Another One Bites the Dust
8/4/08
Before coming to intern here at Brilliont for the summer I never considered the ramification of mergers and acquisitions. I always trusted that due diligence was done prior. There is obviously more to M&A than just increasing the scope of a company that needs to be taken into account.
Take for example Alcatel-Lucent, the company which was born out of the merger of French company Alcatel and American company Lucent. (On a side note, I grew up no too far from an Alcatel headquarters which is currently a private high school.) The merger seemed to make sense since they were both leading telecommunications equipment makers, but since August 2007, the stock has fallen close to 50% and has suffered its sixth straight losing quarter. Stock prices are all about the current value of a companies future cash performance, and investors and analysts see some big problems. It mentions in the Economist article I have linked that there were clear synergistic issues between the American and French managers in the company, and now a board restructuring is under order to try to fix the mess. Who knew the French and Americans could not get along?
-Amit
akooner@brilliont.com
Tags: Alcatel, Alcatel-Lucent, Brilliont, Economist
