Lucent nominates defence unit board

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Lucent on Monday proposed three former Clinton administration officials as guardians of its sensitive defence contracts after it yields to Alcatel of France in a proposed $36bn deal to create the world’s second-largest telecoms equipment vendor.

The US company said it would propose William Perry, former defence secretary, Kenneth Minihan, who under former President Bill Clinton headed the National Security Agency, and James Woolsey, ex-director of the Central Intelligence Agency, for the board of a special subsidiary that would ringfence Lucent’s sensitive contracts.

The US defence department is an important customer for Bell Labs, Lucent’s world famous research division.

The three men will have to be approved by the Republican administration of President George W. Bush before they can be formally appointed.

Lucent on Monday denied their Democrat links would impede the process at a time when concerns about foreign takeovers were rising in the US.

“This isn’t about whether they are Democrat or Republican,” said a Lucent spokesperson.

“This is about whether they have the expertise and experience and are well respected in the security community.”

Nevertheless, both Lucent and Alcatel are treading carefully to avoid mounting protectionism in both their home countries. Alcatel has agreed to inject its sensitive satellite business into French defence electronics company Thales – which is 31 per cent owned by the French government – in return for an increased stake of 25 per cent.

The Thales board will meet late this afternoon to approve the Alcatel deal, as well as consider a second offer from EADS, the Franco-German aerospace group, to inject its own satellite and security interests into Thales.

A Thales spokesperson said both offers would be evaluated even though they were at different stages.

Thales and Alcatel have been discussing a deal for almost a year and are understood to want to press ahead without EADS, returning to the aerospace group’s offer at a later stage.

People close to the parties involved said they expected the Thales board to approve the Alcatel deal and offer to look further at the EADS proposal.

This is almost certain to be rejected by EADS, which continues to insist its satellite interest must be injected simultaneously with that those of Alcatel.

The battle promises to become highly politicised, with EADS’ ambitions already heavily supported by President Jacques Chirac. who is understood to be keen to see French interests joined to create a European space champion.

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