Negotiators for Alcatel and Lucent were on Wednesday night confident they had narrowed most of their differences and could strike a deal to merge the two telecommunications equipment manufacturers within days.

Directors at Alcatel, which is based in France, are expected to meet on Thursday to discuss the terms of the deal, which would value its US rival near its market capitalisation of $13.7bn.

People close to the talks on Wednesday cautioned that the Alcatel board would probably not make a final decision on the deal at this meeting, and that Lucent’s board would also need to approve.

But a final agreement, almost five years after the two companies’ previous attempt to merge, was unlikely to slip past early next week, they added.

Patricia Russo, Lucent chief executive, and Serge Tchuruk, her counterpart at Alcatel, have agreed on many of the broad terms of the combination.

These could trigger a wave of consolidation in the fragmented telecommunications equipment industry. While Alcatel is technically the acquirer in what would be an all-stock deal, Lucent shareholders will be receiving little or no premium to their company’s market value.

The board would be evenly split between former Alcatel and former Lucent directors.

Ms Russo would take over as chief executive and the headquarters would remain in Paris.

Both companies have been working to solve the question of how to shelter some of their more sensitive defence-related work from the control of foreign owners. Lucent has been considering separating its Bell Labs unit under a board composed of Americans.

Alcatel is hoping to push its satellite interests into Thales, the French defence electronics company.

The talks between Alcatel and Lucent come on the heels of a string of deal-making among their largest customers in the telecoms industry.

Over the past two years, the wireless sector has seen Cingular Wireless buy AT&T Wireless and Sprint merge with Nextel.

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