US president George Bush has approved a £6.2bn ($11.8bn) merger between French telecommunications equipment manufacturer Alcatel and US firm Lucent Technologies.
The go-ahead follows the recommendation of the Committee on Foreign Investment in the US, but includes provisos relating to classified work that Lucent carries out under contract to the US government.
The companies must implement a national security agreement and a special security agreement drawn up with US government agencies. It is understood that the two firms have agreed to set up a separate unit run by US staff to handle sensitive government work.
The merged company is set to be one of the world's largest network hardware and software suppliers. Industry analysts have suggested that the merger will bring savings of £975m after three years, with 30% of this clawed back in the first year, largely through efficiencies and staffing cuts.
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