Alcatel, Lucent Merger Off

French telecommunications giant Alcatel SA and Lucent Technologies Inc. apparently failed to reach a merger agreement because Lucent officials didn't want Alcatel to have the upper hand in management of the combined company.

In a short statement issued Tuesday, the companies did not disclose why intense negotiations over the long holiday weekend ended abruptly after financial terms were reached for a deal worth as much as $32 billion.

While not ruling out attempting a merger with another company, financially troubled Lucent plans to go it alone for now as it attempts a turnaround, said sources close to the negotiations who spoke on condition of anonymity.

Issues of corporate governance and management of the combined company were the main roadblocks preventing one of the largest takeovers of a U.S. technology group by a European company.

Lucent officials balked because they did not believe Alcatel was treating the deal as a merger of equals, several sources said.

The deal breaker was Lucent's insistence for equal representation among the combined company's senior managers and on its board. Alcatel apparently declined to agree to those terms.

"Lucent was negotiating a merger, not an acquisition, and when it became clear that was not the way things were going the company decided to pursue its own path," a source said.

Lucent spokeswoman Michelle Davidson declined to elaborate on the statement issued by the two companies. Alcatel spokesman Klaus Wustrack said only that "the deal is off."

Analysts had said the new company would have a work force of more than 200,000 but would probably have had to cut 20,000 to 30,000 jobs to trim costs.

Lucent in January announced plans to reduce its work force by as many as 16,000 jobs as it streamlines operations and sells off some of its factories.

Analyst Steven Koffler of First Union Securities said Lucent faces an uncertain future without the backing Alcatel would have provided.

"This is going to be tough because of a lot of internal problems they're having and because of the state of the industry right now," he said.

Murray Hill, N.J.-based Lucent, which was spun off from AT&T Corp. in 1996, is among the most widely held stocks in America.

Lucent predecessor Bell Labs, which has some 30,000 scientists, has been a leader in U.S. technological innovation, with a role in developing such inventions as the transistor, the laser and superconductors.

But Lucent fell on hard times following a string of strategic missteps and profit disappointments that led to the ouster of chief executive Richard McGinn and a major restructuring. The company's shares are hovering at about one-tenth of their all-time high hit in late 1999.

Analysts said that a deal by Alcatel, which chief executive Serge Tchuruk has built into a diversified maker of cell phones, high-speed telecommunications equipment and Internet switches, would have made it a major player in the U.S. market.

More than half of Alcatel's sales are in Europe, while 23 percent of its revenue comes from the United States.

News reports set Lucent's price at between $23.5 billion and $32 billion.

In trading Tuesday afternoon on the New York Stock Exchange, Lucent shares were down 11.5 percent, or $1.08, to close at $8.32 a share, while Alcatel's U.S. shares were down 70 cents, or 2.5 percent, at $27.41.

In extended trading Lucent shares rose 2.8 percent, or 23 cents, at $8.55 a share, while Alcatel's U.S. shares were up $2.34, or 8.5 percent, at $29.75