For Immediate Release
November 17, 2006

Statement on CFIUS Recommendation Regarding Proposed Merger of Lucent Technologies, Inc., and Alcatel

President Bush has accepted the recommendation of the Committee on Foreign Investment in the United States (CFIUS) that he not suspend or prohibit the proposed merger of Lucent Technologies, Inc., and Alcatel, provided that, in time periods specified, the companies execute a National Security Agreement and Special Security Agreement to which they have agreed with U.S. Government agencies. The President's decision was made under section 721 of the Defense Production Act of 1950 (Exon-Florio), which authorizes the President to suspend or prohibit the acquisition of a U.S. company by a foreign company where there is credible evidence that the foreign interest exercising control might take action that threatens to impair the national security and where provisions of law other than Exon-Florio and the International Emergency Economic Powers Act are not adequate and appropriate. Consistent with Exon-Florio, the President will report to the Congress on his decision.

The President's decision is based upon the results of comprehensive consideration of this transaction by CFIUS, a 12-member U.S. Government interagency group. In assessing the proposed acquisition's impact on national security, CFIUS conducted both a 30-day, first-stage investigation and a 45-day, second-stage investigation. With support from the intelligence community, CFIUS's detailed analysis took into account all relevant national security factors, including, but not limited to (1) the scope of Lucent's operations and its work with state, local and federal government agencies, (2) the globalizing nature of the telecommunications industry, (3) the important research and development being conducted at Lucent's Bell Laboratories, and (4) those factors enumerated in Exon-Florio.

Based on these and other considerations, and as a strict condition for the merger to proceed, Alcatel and Lucent have agreed with U.S. Government agencies to enter into two robust and far-reaching agreements designed to ensure the protection of our national security.

The President's decision demonstrates the commitment of the United States to protect its national security interests and maintain its openness to investment, including investment from overseas, which is vital to continued economic growth, job creation, and an ever-stronger nation.

In addition to the Department of the Treasury, the Committee's member agencies include the Departments of State, Defense, Justice, Commerce, and Homeland Security; the Office of Management and Budget; the Office of the United States Trade Representative; the National Security Council; the National Economic Council; the Council of Economic Advisers; and the Office of Science and Technology Policy.

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