The following originally ran on May 31, 2001, and is a completely fictitious account of the entirely made-up email negotiations between
From: Bill Spilingup, Corporate Relations, Lucent Technologies
You'll remember us from the former competition we used to offer you in the networking market. Said competition having disappeared because of changing marketplace realities, we were wondering whether any of you might be interested in creating a synergistic partnership of equals based on an integrated solutions platform of services. .
Aw, heck, let's cut to the chase. It's not looking good over here. Does anyone want to buy us? AT&T, we know about the spinoff and all, but there's still time to reconsider at substantially the same price.
Please reply with serious offers -- not to say that they have to exceed our share price, but you have to mean it.
From: Pepe Le Chance, Corporate Liaison, Alcatel
To: Bill Spilingup
It is with interest that I read your email. While we are having difficulties also, we have not -- how do you Americans say? -- screwed up as badly as have you. The ease with which you have parlayed a $230 billion company into a $28 billion farce is formidable. On the other hand, we have taken Alcatel from a bloated behemoth involved in a ludicrously wide range of industries to a focused, disciplined company whose shares have risen 80% since Jan. 1, 1999. Our CEO is tres fond of fixing broken companies.
Donc, we are able at this time to make an offer for your company, under the right conditions. The main one, naturellement, is that we do not pay any more for Lucent than any but the very oldest shareholders paid. We find the current share price to be like mousse au chocolat at an imitation French restaurant -- too rich for the discerning palate. We would propose a price slightly lower, in the region of $7 per share, and complete abolition of your management and board.
Repondez, s'il vous plait, at your earliest convenience.
Thank you, thank you, thank you for your warm, encouraging letter. We at Lucent would love the opportunity to work with your fine organization. First, we think that the potential business synergies are substantial. Second, we relish the thought of engaging in negotiations while dining on frogs' legs and brioche. Our CEO is a Francophile from way back.
The price you quote is perfectly acceptable to the board. We've repriced all of our options below the stated level, so there's no problem there. As to the other so-called "shareholders" of the company, well, most of them are old grannies, who got the stock as a spinoff from AT&T. They've never had a clue.
With regard to the board and management, however, we had a different proposal in mind. Like in any separation, as I'm sure you in France agree, it's important that all parties be able to maintain the lifestyle to which they have become accustomed. In that spirit, we expect all members of our board to be transferred to Alcatel's board. You'll be happy to know that we've already chosen a beautiful chalet in the French Alps, where the board can meet during ski season. In the spirit of egalite, we'll leave the summer retreat to your discretion.
Also, Lucent's upper management will need accommodation in the joint business. We feel that we've earned top positions at Alcatel, considering the outstanding work we've done creating value for Lucent's insiders. In addition, since we're American and you're French, and therefore nobody likes you, we will add much-needed credibility to your company. I look forward to receiving a detailed executive compensation package.
So that you might not object to our requests for managerial and board compensation, we'll reduce the share price of the transaction to $6.90. On this point, as you see, we are perfectly open to negotiation.
Paris in the springtime, here we come!
We find your counteroffer of $6.90 most pleasing. With regard to your management team, however, we think that you have misunderstood our intentions. We feel, as does any objective observer of the situation, that your current management and board are the ones responsible for the debacle at Lucent.
You managed to lose $3.7 billion in the first quarter of this calendar year. We, on the other hand, made 210 million euros in genuine profit. You are infamous for handing out loans like a drunken sailor to any cheap little telco that comes begging. To let you retain positions of influence at Alcatel would be as foolish as allowing a megalomaniac to rise to power in the wake of a revolution. We will not make that mistake a second time.
You are in huge trouble, mon ami. I do not think even you have confidence that you can work it out. You could take our proposal for the sake of your shareholders, or you could selfishly sink this deal over concerns about your own jobs. The choice is yours.
It's true that our market cap has fallen faster than you people surrender to Germany every generation or so, but that doesn't mean you have to get snippy and actually hold us responsible! Let's talk about this reasonably. We could throw a few people overboard, sure, but the real fault for our problems lies with the line workers and other employees, most of which we can lay off! So help a brother out here. We're willing to split the board half and half, and jettison maybe 10% of our execs.
I cannot help you. It seems that you and your shareholders must go down together. Perhaps that is as it should be.
Since that time, Lucent has lost an additional 50% of its stock price, making the choice not to pursue Alcatel's 2001 offer more or less disastrous for shareholders. Let's hope it works better this time around.
We miss Brian Lund. At the time the article originally ran, he owned no shares in the companies mentioned. Whether he does today, we can't say. This article was updated by Bill Barker, who does not own shares of these companies. The Motley Fool is investors writing for investors.